VAT to Drop from 5% to 4% on 90 Basic Products
The new regional government of Madeira, led by Miguel Albuquerque, has announced a plan to lower the Value Added Tax (VAT) on around 90 essential goods. This reduction will bring the VAT rate from 5% down to 4%, with the aim of making basic products more affordable for local families. According to the government, this change could affect the regional budget by nearly 7 million euros.
Opposition Demands Clear Timeline
Despite the announcement, critics raised concerns about when and how the VAT cut will take effect. The Liberal Initiative party reminded the government that Madeira does not currently have the lowest taxes in Portugal - that title belongs to the Azores. They also questioned whether the VAT reduction would even happen during this legislative term. Their doubts are tied to the need for changes in the national law on regional finances. Without updates to that law, it remains unclear if Madeira can go forward with the tax change on its own.
Budget Impact Unclear, as Retail Prices Might Not be Passed on To The Consumer
The government claims the tax cut is designed to ease the cost of living and help households manage everyday expenses. However, the exact list of the 90 products has not been released. Consumer groups and economists will be watching closely to see if the prices truly go down or if retailers absorb the change without passing savings on to customers.
Source: RTP Madeira
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