VAT cut – reloaded

In the last 2 years the VAT on basic food products such as eggs, pork and poultry was reduced, but internet service’s VAT also became lower than the earlier flat rate of 27 percent. Before the
VAT law was modified, there had been great debate about whether the retail sector would offer those products cheaper which were to fall under the scope of the VAT cut or not. According
the latest statistical data, in the first half of 2016 these foods had definitely become cheaper, but in the second half of last year prices started to grow again, and by October 2017 the effect
of the VAT cut was gone. The purpose of the VAT reduction was to decrease consumption prices, which would lead to increased demand, creating a domestic market for products.
Consequently, this increased demand could have meant greater revenue for the central budget, and the creation of new jobs. Now that the level of employment is growing, together
with real wages, people are spending money that they have earned and not loans. Hopefully this will generate a lasting upturn in grocery retail too. //