Spain has announced a temporary elimination of the sales tax on olive oil in response to the significant price increases that have impacted consumers. As the world's leading producer and exporter of olive oil, Spain has been facing challenges due to global inflationary pressures and a prolonged drought that has severely affected supplies. This surge in prices has also been observed in other Mediterranean countries.
According to Spain's agriculture ministry, the price of olive oil has surged by a staggering 272% since September 2020. This has resulted in a five-liter bottle of olive oil costing over 50 euros ($53) at Spanish supermarkets. Olive oil holds a significant place in Spanish cuisine, being used for cooking as well as garnishing various dishes such as sandwiches, salads, and vegetables.
Despite the high consumption rate of olive oil in Spain, with households averaging 6 liters per person annually, the rise in prices has prompted some consumers to seek out cheaper cooking oil alternatives. In response to the situation, the government had previously reduced the sales tax on olive oil from 10% to 5% as part of measures to combat inflation.
Effective from July through September, no sales tax will be applied to olive oil in Spain. Subsequently, from October to December, a 2% tax rate will be implemented, followed by a 4% tax rate from the beginning of the next year. Olive oil will also be classified as a basic food item, reflecting its importance in the Mediterranean diet and promoting a healthy lifestyle.
The decision to eliminate the sales tax on olive oil underscores the government's recognition of the crucial role that olive oil plays in Spanish culture and dietary habits. By providing temporary relief to consumers through this tax exemption, Spain aims to alleviate the financial burden caused by the soaring prices of olive oil.
