For Social Democrat (SDE) Piret Hartman, one of her personal priorities before leaving her post as agriculture minister was food prices. At the end of last year, she requested that the Center of Estonian Rural Research and Knowledge (METK) analyze whether food products should be subject to a lower VAT rate.

Minister of Finance Jürgen Ligi (Reform) has repeatedly stated that there is no point to a special VAT regime, and was critical of Hartman's plan at the time as well.

"Piret's entire decision to commission this study and take on this issue is, of course, a very incompetent move," Ligi told ERR.

"That ministry lacks expertise on state budget and tax policy issues," the finance minister said. "Another thing is that there is nothing to research; all these impacts have already been studied. In theory, it's already established that lowering the VAT has little impact on prices, and the cost benefit doesn't reach consumers to a significant extent; it gets lost along the [supply] chain. This in no way reduces inequality; rather, it increases it."

Now that the SDE is out of the government, the new minister of rural affairs and agriculture, Eesti 200's Hendrik Terras, is moving forward with the issue despite the opposition to it.

"In order for us to have something to discuss, it would be good if we had a clear picture of what impact it has," Terras explained. "Anything else until then is speculation, because arguments have been presented from both sides, and they're often contradictory. So a legal basis would certainly help contribute to this discussion."

This matter has not yet been discussed in the new two-party, Reform-Eesti 200 coalition.

Will Ligi soften his stance and consider a reduced VAT rate on food products?

"I can't say whether Jürgen Ligi will soften his position," Terras responded. "Our coalition negotiations are ongoing, and we are currently engaging in consultation rounds, so we're not at that stage yet."

METK is still working on its analysis, and center spokesperson Krista Kõiv confirmed that they will not comment on it at this stage.

Kõiv did note in a written response, however, that the impact assessment commissioned by the Ministry of Rural Affairs and Agriculture will analyze the potential impacts of reducing the VAT on household food expenditures, the state budget as well as participants in the supply chain. The study will also examine the impacts of reducing the VAT on various groups of food products.

The ministry has agreed that METK will present its calculations by the end of the year.

Starting July 1, the VAT in Estonia will rise two percentage points from the current 22 percent to 24 percent. Retailers believe the state should consider a VAT reduction or exemption on food products, as is the case in most European countries.

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