As of July 1, VAT in Estonia — including on all foodstuffs — was raised to 24 percent, one of the highest rates in the European Union.

The initiative, launched on June 30 on the Citizen Initiative Portal (Rahvaalgatus.ee), aims to send a message to the Riigikogu that the tax burden increases inequality and strains consumers' food budgets.

The petition was started by food blogger and winner of the first season of MasterChef Eesti Jana Guzanova.

This is one of the most popular initiatives posted on the platform to date, beaten only by an appeal to scrap car tax, which garnered 65,565 signatures. As the petition is open until August 11, it may end up topping that total.

Petitions signed on the website are forwarded to the Riigikogu once they collect over 1,000 digital signatures. Signatures must be authenticated with an ID card.

Two draft bills put forward by opposition parties to reduce the VAT rate on foodstuffs were rejected by members of parliament in April. In February, Social Democratic Party Chairman Lauri Läänemets proposed reducing the rate to 9 percent.

Government against reducing VAT

Läänemets has also backed the new initiative.

He said reducing VAT on food products is necessary because it not only helps improve people's livelihoods but also provides indirect support to Estonian agriculture and food production.

Läänemets said food prices in Estonia are unreasonably high and that lowering VAT could help change that.

At the same time, he acknowledged that if VAT on food is reduced, it is important to ensure that the lower rate is reflected in actual store prices and does not simply increase retailers' profit margins.

Although SDE was part of the government that implemented the VAT increase, Läänemets sees no contradiction in supporting a reduction in VAT on food.

He noted that an analysis of lowering VAT on food prices was initiated last September within the Ministry of Regional Affairs and Agriculture, led by fellow Social Democrat Piret Hartman, right after Kristen Michal's first government took office.

Läänemets said the analysis has since stalled with the formation of the new government.

"In January 2025, I had a very long conversation with Prime Minister Kristen Michal, where I said plainly that lowering VAT on food must be done, and that this government must carry it out. In hindsight, that may be one of the reasons why the Social Democrats were excluded from the government," the chairman said.

Minister of Finance Jürgen Ligi (Reform) has said that VAT cannot be reduced on foodstuffs, as in his view it would merely line the pockets of retailers. He branded the discussion – implemented by the majority of countries in Europe – as populist and utterly shameless.

Kristina Kallas, chair of Eesti 200 and minister of education and research, has also said that VAT on food cannot be lowered because the state lacks the necessary funds.

Estonia has a flat rate of income tax at 24 percent.

--

Follow ERR News on Facebook, Bluesky and X and never miss an update!