The question that was raised now that led the Government to change its mind in relation to VAT was the determination that an agreement with the distribution was necessary, explained Fernando Medina, Minister of Finance, in an interview with RTP, recalling what happened in Spain that The final price decrease was not visible, because it was a “unilateral” decrease.
The negotiations were able to advance when the Government perceived “a real and genuine will to reach an agreement” with the other two parties, distribution and production. “We were able to create a quite different picture, of transferring the VAT revenue that would be collected by the State to the pockets of the Portuguese,” said the minister, noting that before this moment “there were no conditions [antes] for this agreement”. Without an agreement, it would be at the discretion of the distribution chains, he assumed, also emphasizing the entry into this production agreement.
An original basket with 96 products, the Easter goat and the minister who couldn’t be in the photo. Behind the scenes of the zero VAT deal
The agreement “gives us confidence that we are going to have a reduction in the consumer’s pocket,” reinforced Medina, and explained that the agreement “has a novelty” of including the productive sector, CAP and other associations. The CNA is not included in the agreement and has already criticized it.
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Medina has shown on several occasions that he has confidence in the agreement both to lower the price, but even more so to stabilize it.
In an interview with RTP, Medina was asked several times about the change of opinion regarding VAT. The savings that she will revert, in a basket of 200 euros, will be 12 euros per month. “It is one more contribution that is made” and “if it is accompanied by an effort to stabilize prices, it has an impact.” The cost estimated by the Government of zero VAT for the State is 410 million euros. A measure aimed at those most in need instead of zero VAT? “In this programme, the most important measure from the point of view of economic impact was the support measure for vulnerable families”, which has a cost of 700 million euros, with 30 euros of support per month plus a complement of 15 euros for children receiving up to the fourth step of the family allowance. “I was pondered [dar tudo às famílias vulneráveis], but one of the reasons that led us to measure VAT was to seek some stabilization of prices”, Medina assumed. VAT is now considered a tax that penalizes low-income families more, reinforces Medina to justify the option for the measure. “That is the argument for lowering VAT.”
Because it has a greater impact on low-income families, “we opted for this measure,” said the Minister of Finance. Pricing by the Government is pending, as there is a risk that the products will run out of shelves. “Price fixing would have as a direct consequence the possible disappearance of goods in distribution and their appearance in the parallel market.”
What is sought is price stabilization? Won’t there be a decline again? “There will be products that will not return, there will be others that will return and can be downloaded,” believes Fernando Medina. There are production and distribution costs to which prices are returning, so the Minister of Finance believes that the drop in prices in some areas could return to final prices.
Regarding the proposal to increase the civil service, on an interim basis, by 1%, Medina
Source: Observadora
