Finance Ministry considering food VAT rate cuts during inflation spike
Last week, the Greek government confirmed a revaluation of cutting Value Added Tax rate on basic foodstuffs. The current reduced rate is 13% on certain foods; 24% on most other supplies. The Finance Ministry may consider a cut to zero. However, minister are concerned that any cut would not percolate through to consumer prices, instead being absorbed by supply chain players.
January inflation reached 5.5% in January, up from the record 5.1% in December 2021. This is the highest rate in 12 years.
Many EU states have cut VAT on electricity and other supplies under the existing rules, and are preparing for the new powers to extend this.
Cuts ruled out in 2021
The Greek government last year turned down a range of Value Added Tax cuts to help consumers deal with recent record-breaking inflation. December inflation rate hit 5.1%, which energy prices being the main driver as several times this rate.
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EU states to benefit from new reduced VAT rate freedoms
In December 2021, EU finance ministers agreed to a wider range of goods and services being eligible for reduced VAT rates. This included basics, eco-friendly supplies and provisions for emergencies such as COVID-19. This faces a non-binding vote in the EU Parliament and then formal ratification by minister – likely to be March.
