9 percent VAT for food products at the latest next year says agriculture minister

9 percent VAT for foods at the latest next year says agriculture minister

Newsroom 10/07/2012 | 14:22

Reducing the VAT from 24 percent to 9 percent for food products will be included in next year’s budget at the latest, should the measure not be implemented starting this year, said agriculture minister Daniel Constantin at a Mediafax conference.

He explained that main reason for implementing the VAT cut is that this will help reduce tax evasion which reaches high levels in the food industry. “It shouldn’t be regarded as a social measure – that of reducing the price of bread. Yes, the price of bread will certainly go down or at least it will not grow for a long time. However, the most important effect we are considering and the reason behind taking this measure is to generate more cash to the state budget by revealing the underground economy,” said Constantin.

The agriculture minister added he hopes that following the visit of IMF representatives on July 25, the ministry will be able to present a clear schedule to implement the VAT reduction for food products to 9 percent. “I personally want the VAT reduction to be implemented this year for two industries – milling and bakery – as this is where the highest tax evasion happens in agriculture, he said.

Finance minister Florin Georgescu previously stated that the decision on the matter will have to be taken after the parliamentary elections this November.

IMF representatives have announced in May when the measure was first proposed, that as a general principle, the institution doesn’t recommend special VAT levels as this leads to tax evasion and is not beneficial to consumers.