Spain Slashes Olive Oil Sales Tax to Combat Soaring Prices

In a move aimed at providing relief to consumers, the Spanish government has announced a temporary cut of sales tax on olive oil. This decision came due to increases in prices of 272% since September 2020.

Spain, which is the leading producer and exporter of olive oil, has seen struggling domestic sales with a spike in costs due to inflation and a long drought that has reduced supplies significantly. The spike has caused bottles of five liters of olive oil to cost over 50€ now.

The importance of olive oil in Spain’s eating habits is great. The average person consumes six liters of olive oil a year, in comparison to 0.4 liters for international customers. Olive oil is essential in every Spanish household. It’s used for sprinkling on many dishes and is eaten casually with sandwiches. But the recent prices have caused consumers to seek cheaper alternatives.

The government’s sales tax cut is part of a broad anti-inflation package. The tax will be implemented in 3 phases:

  1. From July to September 2024: 0% sales tax
  2. From October to December 2024: 2% sales tax
  3. From January 2025 onwards: 4% sales tax (olive oil will be classified as a basic foodstuff)

This is expected to lead to savings of between 35 and 75 cents per liter, depending on which type of olive oil.

The Treasury Minister María Jesús Montero emphasized that this decision is due to “the importance of olive oil in the Mediterranean diet and a healthy lifestyle.”

Consumer organizations have praised the move, but some experts stated that its impact will be limited. Nevertheless, this move reflects the government’s commitment to addressing the costs faced by Spanish households.

This olive oil tax reduction serves as a reminder of the intricate balance between agricultural challenges, economic policies, and cultural traditions.

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