Portugal extends zero tax rate on basic food until year’s end

Alyssa McMurtry

OVIEDO, Spain (AA) - The Portuguese government approved Thursday the extension of a temporary sales tax exemption on basic food products until the end of the year.

The sales tax rate for 46 basic food products dropped from 6% to 0% in April to help citizens cope with soaring inflation.

Foods that qualify for the exemption are said to be a basic part of a healthy Portuguese diet and include fruits, vegetables, legumes, dairy products, some meat, eggs, olive oil, bread, and eggs.

The tax exemption was set to expire in October, but with food inflation still at 7.3% year-over-year, the government decided to extend it until Dec. 31. The government estimates that extending the tax break will cost €140 million ($150 million).

When the measure first took effect, inflation for food products was at 15.4% year-over-year.

"The measure contributed to reducing prices. We want to keep controlling the price of essential food products to help Portuguese families," Prime Minister Antonio Costa said Wednesday.

Costa said that the government aims to pass new measures to help families struggling to pay mortgages due to higher interest rates.