The decision of the coalition parties not to support the lowering of the food VAT to 5 percent shows their long-term attitude and the continuation of a tax policy that favors the wealthy, said Andrei Korobeinik, deputy chairman of the Riigikogu Central Party faction, after the parliament did not support the proposal.
“Foodstuffs have noticeably become more expensive over the past year and, unfortunately, there is no sign of a slowdown in price growth in the near future. For example, compared to August last year, the price of meat and meat products has increased by 14.9 percent, and milk, milk products, and eggs by 10.9 percent. While the Swedish government is considering various tax reductions, the government led by the Reform Party is going the opposite way. The increase in VAT that will come into effect in January will raise food prices even more,” he said Andrei Korobeinik.
According to Andrei Korobeinik, the poorer segments of the population, who spend a significant part of their income on food, suffer the most from the price increase. “This leads to an increase in inequality in Estonian society. Estonia is one of the four member states of the European Union that does not apply a reduced VAT rate to food products. Reducing sales tax means that instead of, for example, 500 euros, 420 euros should be paid for food,” noted Andrei Korobeinik.
Andrei Korobeinik pointed out that a lower VAT rate applies to food in most European countries, and Estonia should follow this path as soon as possible. “In Finland, the VAT on food is 14 percent, in Sweden 12 percent, in Latvia 5 percent, and in Spain and Italy it is 4 percent instead. Food is an unavoidable expense for families and it must not become a luxury item,” emphasized the member of the board of the Center Party. “Deputies of the Reform Party, the Social Democratic Party and Estonia 200 did not vote and showed with this step that they do not care about making food more accessible.”
“Studies show that the price rally also significantly affects the consumption of food products – the proportion of discounted and cheaper products in people’s shopping baskets increases, which in turn has an impact on the quality of life. Estonians prefer domestic food, but are also very price sensitive. Under the conditions of price pressure of imported goods, a large part of the Estonian food industry works on the edge of survival. Foreign food manufacturers who sell their products on the market here mostly operate on preferential terms offered by the home country,” added Andrei Korobeinik.
