Mario Centeno believes that zero VAT comes with a big risk that consumers will not feel it.

The governor of the Bank of Portugal (BdP) said this Thursday that zero VAT on food is a measure with a “great risk” of being “imperceptible” to end consumers and has a “relatively high” budgetary cost.

This Thursday, Mario Centeno went to Escola Secundária de São Pedro in Vila Real to give a “class” on topics such as inflation and interest rates, and one of the questions asked by the students was about the impact of the zero VAT measure on food baskets which came into effect on Tuesday.

“The VAT reduction is temporary, that’s how it was presented, it’s very difficult to estimate because prices change every day. In fact, it will fight against what I was talking about a minute ago, which is that the markets allow the transfer, in the final price of the cost reduction that was already felt internationally this Thursday, and therefore this is a measure that has a high risk that end users will not feel it,” said the governor of the PB.

In his opinion, the initiative also has a “relatively high budgetary cost, and is also a measure that, from a budgetary point of view, is not targeted at the most vulnerable.”

“And I don’t think I’ll say anything else,” said Mario Centeno in front of an audience full of students from Vila Real and Ribeira de Peña.

The measure, which exempts a set of 46 food items from VAT, went into effect on Tuesday, and while the food distribution sector has 15 days to move it to public selling prices, several supermarkets and hypermarkets have opened to the public. to announce prices. at “VAT 0%”.

The 46 products in the zero VAT basket were selected based on the health food basket from the Ministry of Health and distribution companies’ data on the foods most consumed by the Portuguese.

The measure will remain in place until the end of October and the government estimates it will contribute 0.2% to lower inflation in 2023.

The initiative that brought Mario Centeno to the school was supported by the Youth Academy Association in partnership with the Municipality of Vila Real and Escola Secundaria San Pedro.