High incomes are benefiting more than low incomes from the VAT reduction on certain products in the shopping cart. The savings during the semester in which it will be in force, in principle, the measure is minimal for households, but as it happened with the general rebate on fuel or with the gratuity of Cercanías and Rodalies trains, the most favored in terms They are the households with the greatest economic possibilities. It is the main conclusion of a study by EsadeEcPol released this Thursday in which fiscal aid is described as “expensive and inefficient.”
Families with the lowest income will save, specifically, less than 3 euros a month with the tax reduction that came into effect on January 1. Until June 30, the date of its completion, the reduction in spending in the supermarket will be 17.5 euros.
This saving increases as the income is higher. In this way, households with an average income will save around 30 euros this semester, which is about 5 euros per month. The highest incomes, for their part, will avoid paying up to 42 euros on their purchases of basic products during these six months, which is equivalent to a saving of about 7 euros per month.
“Most of the fiscal cost of the measure is allocated to saving households with higher incomes,” says the report prepared by Miguel Almunia, Javier Martínez and Ángel Martínez, which uses the distribution data available on the Datamarket platform with the household budget survey. This anomalous situation for a measure that should help the most vulnerable is due to the fact that, as was the case with other anti-inflation aid, as the economic capacity of the household increases, spending on food such as fruit, vegetables, bread, milk, cheese or fruit also increases. Specifically, households with the highest income spend more than 2,000 euros a year on the products affected by the VAT reduction, while the most modest incomes reduce the purchase to less than 1,000 euros.
“Five out of every ten euros that are not collected due to the VAT reduction go to the 40% of households with the greatest economic capacity,” says EsadeEcPol. The estimate of the decrease in collection has been made by the Bank of Spain, which in a February report estimated it at 645 million. The VAT reduction in force is, however, progressive if its impact is taken into account as a percentage of household spending, since the estimated saving amounts to 0.15% of the half-yearly spending of households with the lowest income and barely 0.07% of the wealthiest.
The savings of Spanish families, in general, when making the purchase is “modest” compared to the “inflationary shock”, conclude the authors of the study. Last year, in effect, the price of food increased by 13% when the measure in force will barely produce a 3.6% reduction in the prices of a specific group of foods.
The report from the center for economic studies proposes a possible solution so that the measure can be more effective from the distributive point of view and does not benefit high incomes: a direct transfer to the most needy households. In this sense, it coincides with the recommendation already made by the Bank of Spain, which proposed ending the measure and activating a direct check of 350 euros to families located among the 30% of the population with the lowest income.
