If the state were to reduce the VAT rate on food from 24 percent to 13 percent it would cost €245 million, according to calculations by the Ministry of Finance.
Estonia’s VAT rate was raised to 24 percent on July 1 and the measure is expected to generate €108 million for the state budget. It is not known how much will come from sales of foodstuffs, as the ministry does not keep separate figures.
Estonia is one of the only countries in Europe not to apply a lower rate of VAT on food.
A petition launched at the end of June calling for a 10 percent VAT rate on food had gathered nearly 90,000 signatures by Tuesday morning. So far, the government, led by Prime Minister Kristen Michal (Reform), has all but dismissed the proposal.
If the VAT on food were reduced to the European average of approximately 13 percent it would generate around €290 million in VAT revenue next year. This is €245 million less than expected with a 24 percent tax rate.
More read: ERR.EE
