The State is one of the great beneficiaries of the rise in food prices thanks to a dozen taxes throughout the entire production and distribution chain. They are taxes that contribute to food prices rising by an average of 283% between the farm and the supermarket, according to August data from the monthly barometer prepared by the agrarian organization Coag.
The examples are multiple, with even higher increases. . The difference between the two prices is 648%, as shown by the Price Index for Food Origin and Destination (Ipod). And the same happens with carrots or pork with a difference of 563% and 260% respectively. But why so much difference? The existence of multiple intermediaries throughout the chain multiplies the costs and the payment to the Treasury, raising the final price, which harms the consumer. In addition, the tax base must be taken into account, which benefits the State more.
Already at the beginning of the chain there are many production costs assumed by the farmer. The purchase of fertilizers represents the largest part at a time when its price has tripled since it was imported from states such as Russia and Belarus, which are now suffering from the sanctions of the European Union. As a result of the fiscal reform, it is estimated that the State will collect 279 million euros only for the Value Added Tax (VAT) on nitrogenous fertilizers.
Primary sector tax
The agri-food system contributes 9% of the Gross Added Value of the Spanish economy and employs two million people. Farmers and ranchers must face the Personal Income Tax (IRPF), which taxes income and capital gains, and which is the main tax burden they must assume. However, there are two alternatives. On the one hand, they can take advantage of the Direct Estimate Regime, specific for agricultural activity and mandatory when the volume of gross yields in a year exceeds 300,000 euros.
On the other, there is the Objective Estimation Regime, used by 80% of Spanish farmers, since “it is more convenient to declare and offers greater advantages,” says the tax expert from the Young Farmers Agricultural Association (Asaja), Juan Jose Alvarez. This is calculated through the application of the indices on modules. It is a tax regime for agricultural, livestock and forestry activities and that calculates income through the application of fixed and specific net return indices for each type of activity. However, there are reducing indices such as the means of production used by others, salaried personnel, ecological activities and per young farmer. Beyond this, agricultural companies must also pay Corporation Tax, which is levied on net profit, and VAT, which is also levied on all purchases, but since it falls on the consumer, it has a neutral fiscal effect for the producer.
Farmers can take advantage of the Reagp, the Special Regime for Agriculture, Livestock and Fisheries, which allows entrepreneurs not to have to pay VAT on those sales of natural products that have been obtained from farms and on deliveries of investment goods , as long as they are not real estate. The Reagp is the result of applying a percentage to the sale price of the products obtained. In the case of agriculture it is 12% and in the case of livestock, 10.5%, that is to say that the former are the least taxed. “What the sector is asking for is to match both percentages to the increase in costs, that is, that livestock have the same percentage as agriculture,” says Álvarez. In the countryside, farmers and ranchers also have to pay the Real Estate Tax (IBI), the Tax on hydrocarbons for the use of tractors and agricultural machinery, Taxes on electricity, plastic or Economic Activities.
Other taxes
But the tax burden is not just limited to production. Storage, transportation, distribution and consumption are the phases a product goes through from the beginning of its route in the field until it reaches the consumer’s table. Throughout the entire process, taxes are paid repeatedly according to the companies and intermediaries that participate in the chain.
In transport, you have to pay taxes on hydrocarbons, registration, circulation, Companies, Economic Activities, etc. There is no doubt, however, that it is in the case of distribution that more taxes must be faced. Added to all those mentioned above, there are also n; Taxes on sugary drinks in Catalonia, the special tax on alcoholic beverages throughout the country and many others.
At the end of the chain, alcoholic beverages and ornamental plants are those with the highest percentage of VAT, 21%. Likewise, meat and fish together with non-alcoholic beverages represent 10% of said tax. Finally, fresh products such as fruits, vegetables, milk, cheese, eggs, cereals, bread and flour are only taxed at 4%.
Vision of the employers
Business organizations are therefore asking the Government for solutions and a reduction in tax pressure. The Spanish Association of Distributors, Self-Services and Supermarkets (Asedas) thus ensures that “the Executive must reduce the VAT on food, suspend special taxes and postpone the entry into force of new ones, as is the case of the tax on plastic”.
Something similar is required by the Spanish Federation of Food and Drink Industries (Fiab). “We ask that no fiscal or regulatory measure be adopted that reduces the competitiveness of the sector or the families,” says the employers’ association. “Thus, for example, we have requested that the entry into force of the Special Tax on Plastic Containers be delayed by at least one year, until January 2024,” they assure this newspaper from Fiab. Likewise, Asaja has requested that the bill for diesel and fertilizers be reduced by 35% and for plastics by 15%. “This was something that already existed,” says Álvarez.
The Government has not commented on this. However, it has approved Royal Decree-Law 4/2022 in order to alleviate the negative consequences of the drought and production costs. Likewise, in the case of diesel there is a partial refund for professionals for tractor engines and agricultural machinery in general. The refund is 63.71 euros for every 1,000 liters based on the volume used.
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