The Seimas has proposals to reduce food prices and new benefits for companies

The bill on value added tax presented by member of the Seimas E. Sabutis also establishes a 9 percent preferential. VAT rate on food and beverage service activities, excluding trade in alcoholic beverages.

The parliamentarian who registered such legislative changes emphasizes that this would reduce the prices of basic foods by about 8%. Higher consumption and lower imports from neighboring countries would increase food billing, increase investment in production and lead to greater competitiveness in the EU’s single internal market.

“With growing income inequality and rising average food prices, a large proportion of the country’s low-income population increasingly feels the challenges of social exclusion. The most vulnerable groups in society are getting closer quickly to the relative poverty line. It is necessary to take into account the current situation, faced with the coronavirus crisis and the daily financial difficulties caused by the pandemic, reducing the prices of essential food products would at least partially solve the problems monetary, ”said Seimas member E. Sabutis.

According to the parliamentarian, the bill stipulates that the government or an institution it designates may determine the basket of basic necessities, taking into account current and changing conditions. These could be the most popular food products: bread, wheat flour, various vegetables and fruits, oil, fresh meat, eggs and dairy products, which should be more accessible and affordable for Lithuanian families.

“I am aware that similar legislative proposals have been made more than once and are met with great resistance, but the current challenges facing society require the right steps and solutions. I am convinced that this measure will work, because the budget loss will not be as great as it can be, according to political opponents. Both the share of the shadow economy and the volume of imports from neighboring countries are likely to decline. In this way, we will help not only the consumer, but also the business ”, said E. Sabutis.

According to the Seimas member, the non-reduction of prices after applying the VAT deduction would not necessarily mean that the merchants are dishonest and that the market in the country is not working properly, in which case there would be reasonable suspicions of cartels or improper functioning of the market control authorities.

The proposed Value Added Tax Law also offers a reduced rate for organic products. E. Sabutis points out that this change would promote responsible and environmentally friendly consumption of healthy products, not chemically treated, sustainable and with higher nutritional value. Granting a 9 percent preferential. According to the Seimas member, we would also encourage Lithuanian small producers and growers to increase the VAT rate for organic products produced according to the national agricultural and food quality system, and increase the competitiveness of imported products.

The bill also provides a VAT rebate for catering companies. This could be one of the measures that could mitigate the effects of the economic crisis, since the sector now has a standard rate of 21%. tariff.

“9 percent. The VAT relief would help mitigate the economic consequences of pandemics and quarantine and accelerate the return to pre-crisis levels. The VAT rate applicable to this sector is one of the highest in the Union The data presented show that in 17 of the 27 EU countries a reduced VAT rate is applied to catering establishments, “said the member of the Seimas, E. Sabutis.

The bill on the value added tax will be presented to the next spring session of the Seimas. The amendments are expected to go into effect next year.

Finance Minister: People imagine that if we reduce the VAT on food, it will be 10% cheaper.

Finance Minister Gintarė Skaistė says that the objectives pursued by tax benefits can be achieved in other ways.

“We have the latest OECD recommendations that say we should get rid of tax breaks because they distort the tax system. It is much more appropriate to pursue the same goals through direct payments or certain services. We really see such an addition to many benefits when doing the analysis. , that most of the benefits of the benefit went to the companies and not to the people ”, G. Skaistė told” Žinių radio “.

According to her, most of the benefits of tax relief go to businesses rather than consumers.

“People often imagine that if we reduce VAT on food, the price of all food will go down by 10%. and it will be a lot of fun. But practice shows that a person receives 0.2, and most of the time the business, the remaining 0.8. “We probably need to think about how much the budget is losing and just give them higher salaries and pensions so they can buy that food,” the minister said.

“We still do not have very precise statements about what will change today, the analysis must be completed,” added G. Skaistė.

President Gitana Nauseda also spoke about the need to review tax exemptions.

“There are still many benefits in the tax system that are difficult to justify in any way. Tax rates in Lithuania do not depend on the amount of income earned by one or another person, but on the form of activity. Therefore, there are significant distortions, depending on whether the person is employed or participates in individual activities, ”G. Nausėda told LRT radio.