President of FIPA anticipates price rises in 2024 and argues that zero VAT should be extended
Jorge Henriques considers that it would make sense to extend zero VAT for at least another quarter. President of FIPA says it would be a “cautionary measure” given that “there are no others” to alleviate prices that he expects to rise in 2024 as a result of rising costs, particularly energy.
The president of the Federation of Portuguese Agro-food Industries (FIPA), Jorge Henriques, argues that it would make sense to “extend for a while longer” the VAT exemption on a basket of 46 products in 2024, warning of an “inevitable” rise in prices not only because force of the tax reinstatement, but also as a result of predictable increases in costs, particularly energy and packaging raw materials.
“I would say a quarter, at least, for something to stabilize”, he states, in an interview with Jornal de Negócios and Antena 1, attesting that this would allow him to offset some costs that will increase and, therefore, potentially worsen prices.
“There will be a rise in prices – inevitable, if only not because of the reinstatement of VAT, but also because of the situation we are experiencing at the moment”, which “is extremely complex due to the geopolitical scenario – with the war in Ukraine and, now, in the Middle East – with possible implications for increased fuel and energy costs”, warns Jorge Henriques. Costs that the FIPA president estimates will also increase due to internal circumstances. These implications combined with “the changes that will be introduced in the market in network access rates will cause the cost of energy bills for industry and agriculture to skyrocket again”, he laments.
Then there are raw materials, not only food, with the president of FIPA recalling that Portugal and, for that matter, southern Europe is coming from a period of drought, but also packaging. “We cannot forget that much of what we eat is packaged, be it glass, plastic or paper”, materials that “are already seeing pronounced increases and which, therefore, will have an impact” on prices, he predicts.
Therefore, extending zero VAT would be a “cautionary measure”, since “there are no other measures designed” at this level, points out Jorge Henriques.