Bread and baking industry announces first results after VAT cutback

Taxed production is up 25 percent for flour and 20 percent for bread six months after the VAT was cut back to 9 percent for baked goods. Furthermore, over 150,000 tons of products earned their papers, according to Aurel Popescu, president of the Romanian Employers’ League of the Milling, Bakery and Flour Based Products Industry (Rompan).

“Statistics show that taxed production has increased by 25 percent for flour and 20 percent for brad and an extra 150,000 tons of products were taxed compared to the previous period. Practically we’ve come on top with these products, and all the taxes paid for them go to the state budget and the most important thing is that these products are safe. We have to highlight the fact that a taxed product is a lot safer than a non-taxed product”, Popescu stressed.

Furthermore, baked products are cheaper by 12 percent compared to before the VAT was cut.

The Rompan chairman mentioned the project will move forward because tax evasion still exists and the main objective for the measure was to reduce evasion in this sector by 50 percent.

Is meat next?

Employers working in agriculture made a request last week to apply a similar measure, cutting back VAT from 24 percent to 5 percent, in the meat industry, where tax evasion is currently estimated at EUR 450 million. Romania is also among the European countries with the highest VAT for meat products. Only Denmark uses a higher tax of 25 percent, whereas countries like Poland, Croatia and Cyprus use a 5 percent tax, France – 5.5 percent, Portugal, Belgium and the Netherlands – 6 percent, Germany – 7 percent, Hungary – 18 percent, Bulgaria – 20 percent.

The solicitors also mention that Romania has a very low income level compared to other European countries. A Romanian pays 4.11 euro / kilogram of poultry, while a polish citizen pays 3.80 euro.

The high tax evasion and keeping the VAT for poultry products at 24 percent will lead to direct losses of EUR 61.3 million to the state budget, said Ilie Van, the president of the Romanian Bird Breeders’ Union.

“I believe the zoo technical sector will not survive on a VAT of 24 percent. If we don’t act quickly, it’s not impossible that we will lose our animals and only eat imported meat”, says Van.