Solutions to soaring food prices: opposition proposals to reduce VAT and special taxes

Péter Magyar: radical VAT reduction and abolition of the special tax

Péter Magyar, chairman of the Tisza Party, explained in a statement that the measures introduced by the government will not reduce, but may further increase inflation, even causing food shortages in the case of certain products. According to the politician, if there is no immediate intervention, the increase in food prices could exceed 10% in March, further deepening the livelihood crisis.

The Tisza Party’s proposal would reduce the VAT rate on “healthy foods” to 5% to ease the burden on the population, and would also completely abolish the special retail tax, which significantly burdens the operation of stores and consumer prices.

Momentum: the government could do ten times more to reduce prices

The Momentum Movement also sharply criticized the government’s inflation policy. According to Dávid Bedő, the party’s parliamentary group leader, the current price control measures – such as the price ceiling and the price cap – did not work before, when inflation in Hungary rose to a European record level of 25%.

Bedő pointed out that the profit of Hungarian grocery stores is only around 3%, so there is little room for price reductions without leading to losses or layoffs. At the same time, the government has a 24% margin of manoeuvre that could be freed up by abolishing VAT and the special tax. Momentum therefore proposes that the government reduce VAT to zero for basic foodstuffs and abolish the special retail tax, thereby providing real assistance to the population.

Democratic Coalition: The government is clearly responsible for the inflation crisis

The Democratic Coalition has also sharply criticized the government’s policy, according to them, high inflation is primarily a consequence of the government’s economic decisions. According to the DK, in order to curb the rise in food prices, the VAT on basic foodstuffs should be reduced to zero and the special retail taxes should be abolished.

According to Klára Dobrev, the shadow prime minister of the DK, the Orbán government is “profiting from the most vulnerable people” and, in addition to the VAT reduction, she also urged a significant wage increase so that the population can more easily cope with the livelihood crisis.

Government reaction and expert opinions

The government has not yet responded to the suggestions, but economic experts are divided on the effects of the radical VAT cut. Some analysts believe that it could help reduce inflation and increase purchasing power, while others fear that the budget shortfall resulting from the tax cut would have to be made up in other areas.

In the coming weeks, further economic measures are expected to be on the agenda, which could determine the development of food prices in Hungary. However, opposition parties have made it clear that, in their opinion, the current government steps do not provide a real solution to the worsening livelihood crisis.