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It is true that some members of the Seimas do not support the benefit and deny that only the “elite” will use it, and ordinary people will not feel any benefit. Prime Minister Ingrida Šimonytė reiterates that this is about support for businesses, not visitors to cafes or restaurants. Entrepreneurs argue that if it weren’t for the relief, prices in catering establishments would rise even more.
There is no shortage of visitors to the outdoor cafes on a hot summer afternoon. The food sector, which has been in quarantine for five months, is gradually recovering, as many people want to relax after the pandemic. While residents are noticing that prices in cafes and restaurants are already going up, for now at least, they are not going to beat them.
“I noticed the food, that the food itself became more expensive, the main dishes,” some say.
And others are not even angry about the price increase: “I pay the money with pleasure, I share it with pleasure, because they also need to live.”
Chef David admits that for some time now he has noticed an increase in food prices, forcing restaurants and cafes to review their menus as well.
“In recent years, the prices of meat, fish and vegetables have risen considerably. It will definitely not cover the difference, which is now VAT, it does not fully meet the price standard,” says chef David Armalis.
And businessmen believe that if it weren’t for the VAT relief for the catering sector, prices would rise even more.
“There are many components that explain why prices are going up in restaurants, and from what I have spoken to restaurant owners, a lot of people are expecting a reduction in VAT and have not increased prices as much as they would have.” . Let’s say you planned to increase it by 20 percent, now the growth is 5 to 7 percent, “says Gediminas Balnis, director of Amber Food.
The proposal to reduce the VAT rate from 21 to 9 percent for cafes, restaurants, cultural and sporting events, sports clubs was presented by the Budget and Finance Committee. According to its president, Mykolas Majauskas, small and medium-sized companies, which include the catering sector, the organization of events and sports, were the ones that suffered the most during the pandemic.
According to the parliamentarian, the relief will allow companies to partially offset the costs incurred by these sectors as a result of the coronavirus pandemic.
“In this case, when we talk about the restaurant sector, we are making it very clear that the benefit is not that the cutlet is cheaper on the plate, but that entrepreneurs can stand up more easily after the pandemic,” says Mykolas . Majauskas, president of the Budget and Finance Committee.
It is true that the opposition criticizes the VAT relief of 9 percent for the catering sector. The social democrat Algirdas Sys assures that it is the rich, not the ordinary, who will benefit the most from this benefit. And prices in cafes and restaurants will certainly not go down.
“Those with high incomes will get even more than they made during the crisis and now. Because everyone else who receives a lower income will not increase their income as a result. The service will definitely not become cheaper, those people will receive higher income, business that we support ”, the social democrat Algirdas Sys is convinced.
The Hotel and Restaurant Association states that even 21 countries in the European Union have long enjoyed such an exemption. According to the president of the association Evaldas Šiškauskienė, after applying the VAT relief, the additional money will be used to cover debts.
“It would take the money to pay salaries, maintain jobs and cover raw materials, and certainly the payment of rent and deferred taxes. Now the prices of raw materials have risen from 15 to 20 percent. Salaries have increased in price by about 15 percent, ”says Evalda Šiškauskienė, president of the Hotel and Restaurant Association.
Remigijus Žemaitaitis, a member of the Lithuanian Regional Group, is convinced that rogue companies will be able to take advantage of this benefit. And that will cost the budget several hundred million euros.
“Catering is provided during the organization of the conference, two invoices are issued. One invoice is for the rent of the premises and the other for the meals. Now it will not pay the rent of the premises, because 21 percent will issue an invoice for the service catering ”, explains R. Žemaitaitis.
It is true that such statements by the members of the Seimas enrage both businessmen and their representatives.
“Business is always treated like some kind of bad guy, like a thief. Only everyone forgets that this business is maintained and especially the little one brings everything like bees to the budget. This is not and has not been a respect for business in Lithuania, ”says Evalda Šiskauskienė, President of the Association of Hotels and Restaurants.
The economist Marius Dubnikov is convinced that during the pandemic this sector was badly hit and its forced suspension must be compensated: “We have to talk about the fact that the sectors of forced suspension must have the possibility of recovering. This support should be temporary, of course, but that it is necessary is inevitable, because otherwise we could lose entire sectors, which will be very difficult to revive ”.
After long and heated discussions at the Seimas, 97 Seimas members voted in favor of the 9 percent value-added benefit. Before – 6, but abstained – 23. After the vote, Prime Minister Ingrida Šimonytė stated that in this case the VAT rebate acts as support for companies affected by the pandemic.
“As you know, I am not a big fan of VAT benefits, I never have been. Mainly because it is often argued that VAT relief will be the bottom line for the consumer. In this case, we can say quite clearly that this Benefit acts as a business support, a kind of subsidy, ”he said.
If the president signs the law, the VAT rate of 9 percent will take effect from July this year and will apply until 2023. It is true that, even earlier, Nausėda was skeptical about the reduction of tariffs for the sector. of the restoration. It is estimated that the discount would result in a budget of around € 90 million per year.
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