“Constantly changing something is wrong”: calls to make reduced VAT on food permanent 0 66

The reduced VAT rate on bread, milk, poultry, and eggs should remain in place even after the established expiration date. This opinion was expressed in an interview with Latvian Radio by the head of the Agricultural Market Development Support Department and leading researcher at the Agricultural Resources and Economics Institute (AREI), Inguna Gulbe.

According to her, constant changes in tax policy do not benefit either consumers or trade.

“Constantly changing something would be wrong,” the researcher noted in response to a question about the fate of the reduced rate after June 2027.

Gulbe expressed hope that the preferential VAT would remain even after the completion of the current measure's one-year period.

She also believes that the reduced rate should apply not only to four categories of goods but to almost all food products. According to her, this practice is indeed in place in many European Union countries.

“The idea that something needs to be changed every six months or a year is incorrect, if only because in most European Union countries, a reduced VAT rate on food is in effect,” Gulbe noted.

In the researcher’s opinion, the initial results already speak in favor of this measure. After the introduction of the reduced VAT rate on bread, milk, poultry, and eggs on July 1, prices for these products began to decrease, making it difficult to abandon the benefit later.

Currently, Latvia is undergoing a kind of experiment: a reduced VAT rate of 12% instead of the previous 21% has been introduced only for four of the most demanded product groups and will be in effect until June 30, 2027. After that, the government will have to decide whether to maintain the benefit, abolish it, or extend it to other products.

The issue of VAT on food remains one of the most discussed in the context of rising living costs. Proponents of the reduced rate believe that it helps to keep prices in check, while the authorities will be able to provide a final assessment of the effectiveness of this measure after its expiration.