Filenews 3 May 2023 - by Eleftheria Paizanou
Seven products will be sold (or should be sold) cheaper from Friday, for which yesterday the Council of Ministers decided to impose zero VAT, as a temporary measure against high prices. The decision concerns bread, milk, eggs, baby food, nappies, feminine hygiene products and adult nappies.
The attention of public authorities will now turn to ensuring that the VAT reduction has a similar impact on the final prices that the consumer will have to pay.
The Council of Ministers approved yesterday the decree to be issued by the Minister of Finance, which will impose a zero VAT rate on the above products. A competent government source told "F" that today the decree will be sent to the government printing house to be published.
The zero VAT will apply for a period of six months, i.e. until 31 October, with the possibility of renewal. Today, consumers pay 5% VAT when they buy bread, milk, baby food, eggs and sanitary napkins. When buying baby diapers and adult diapers, VAT is 19%.
VAT was reduced to zero on the basis of European Directive 2022/542, which now allows Member States to reduce or reduce to zero VAT rates on certain consumer products. According to an announcement by the Ministry of Finance, the aim of the measures is to relieve households in dealing with the increased prices of basic products, due to external factors, due to the increases that have occurred internationally and the continuous crises that afflict economies and negatively affect supply chains.
The budgetary cost for the implementation of these measures is expected to amount to approximately €11 million.
And a second package of reductions
At the same time, the study of the competent ministry for the determination of the products on which VAT will be reduced is in progress. It is envisaged that VAT on some products will be reduced from 19% to 12% or 10% and from 5% to 3%.
This list will include more products and the tax relief will be done through a bill, which will be required to be approved by Parliament. Both the zero VAT and its reduction in the number of products are directly linked to the latest legislation approved last Thursday by Parliament to reduce the consumption tax on fuel.
Essentially, the Government had submitted a bill with which the reduction in excise duty on fuel was reduced by 50%, due to the intended parallel application of the measure for zero or reduction of VAT on products. In this way, the Government would continue on the one hand to reduce taxes on fuel and on the other hand to proceed with tax relief on basic products. However, the Parliament unanimously included in the bill a provision whereby the tax relief on fuel will be of the order of 100%, i.e. the implementation of the measure of the Anastasiades Government will continue until the end of June.
Will sign up for fuel
Despite the fact that the Parliament has somewhat changed the plans of the Christodoulides government, increasing the fiscal cost, the President of the Republic will neither refer the law to Parliament nor report it to the Supreme Court. As we have been told, if it did, consumers would not be able to benefit from reduced excise duty on fuel.
