Riigikogu Finance Committee to make VAT reduction decision in March
The Riigikogu Finance Committee on Tuesday discussed a public petition signed by almost 100,000 people to reduce the value-added tax (VAT) on food products and will make a decision on March 7.
The public initiative was launched by food blogger and MasterChef Estonia Season 1 winner Jana Guzanova and called for the VAT on food items to be lowered from 24 percent to 10 percent.
Estonia is one of the only countries in the EU that does not reduce VAT on food or essential items.
"Food prices have increased by nearly 40 percent over the past couple of years, but wages have not even come close to keeping up," Guzanova said before the session.
"We must not forget that more than 300,000 people in Estonia live in either relative or absolute poverty. Nearly one in four people in our society is poor and struggles to make ends meet, struggles to afford food. Sufficient food availability and access are directly linked to ensuring human dignity. Food is a basic necessity for everyone, and limiting access to it through high tax burdens directly undermines decent living conditions," she outlined.
Finance Committee Vice-Chair Andrei Korobeinik (Center) added that the Swedish government plans to halve the VAT on food next year, to 6 percent. In Finland, a reduction from 14 percent to 13.5 percent is under discussion, and in Latvia, there are considerations to lower the VAT on some food items to 12 percent.
Finance Committee Chair Annely Akkermann (Reform) told ERR the committee only heard the appeal on Tuesday. A substantive position will be taken on March 7, she said.
Since, July 1, VAT on food products in Estonia has been 24 percent, which is one of the highest rates in the European Union. Guzanova said such a tax burden deepens inequality and puts additional strain on consumers' food budgets.
The petition collected 98,580 signatures on rahvaalgatus.ee, making it the most signed public initiative in the platform's history.
The previous record-holder was a petition against the introduction of a car tax, which gathered 65,565 signatures. Petitions signed on the website are forwarded to the Riigikogu once they collect over 1,000 digital signatures.
Opposition parties EKRE, Center and SDE all back a reduction in the VAT rate.
However, Minister of Finance Jürgen Ligi (Reform) is against the move and believes it would only benefit retailers, not customers. Kristina Kallas, leader of Eesti 200 and minister of education and research, said the state cannot afford to drop the rate.
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Editor: Valner Väino, Helen Wright
