Croatian Entrepreneurs’ Association calls for uniform reduction of VAT on food

Opposition and government parties have joined the consumer protection associations’ call for Croatian citizens not to buy anything in stores, cafes, restaurants and gas stations on Friday, in order to draw attention to “unjustified price increases and the greed of traders.” According to the advocacy group, traders are the main generators of inflation.

According to a flash estimate by Eurostat, Croatia had the highest inflation rate in the eurozone in December last year, at 4.5 percent, after 4.0 percent in November. Some suppliers have announced further price increases due to rising raw material prices.

According to the Croatian Statistical Office, hotels and restaurants experienced the highest annual price increase, by 9.6 percent, followed by services by 6.7 percent. Food and beverage prices rose by 4.8 percent.

The Association of Entrepreneurs believes that the primary reason for the price increases is the high value-added tax (VAT).

Croatia has three VAT rates: a 5 percent tax applies to some basic foodstuffs such as bread, milk, eggs, fresh meat, fruit and vegetables. Oil, butter, margarine and baby food fall under the 13 percent VAT, while all other foodstuffs are subject to a 25 percent tax.

The UGP assessed that Croatia faces serious systemic problems that make life difficult for its citizens. Here, the high VAT on food prices was mentioned, which is among the highest in the EU and significantly increases the costs for citizens. Furthermore, attention was drawn to labor shortages and low production.