Romanian meat processors deem cutting VAT for foodstuff would diminish prices and hike sales

Publish date: 08-02-2008
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A 14 percent cut in the VAT would trigger a boost in sales and therefore in profitability leading to a slump in prices for foodstuff, president of the Romanian Meat Association, Sorin Minea said.

According to Minea, reducing the VAT to 5 percent would lead to price decreases of 14 percent the most.

Prime Minister Calin Popescu Tariceanu declared yesterday that the Finance Ministry will appeal the the decision of cutting VAT for basic foodstuff, if the measure is approved.

Tariceanu believes cutting the VAT from 19 percent to 5 percent would reduce budgetary revenues, increase revenues of traders and corruption in public administration.

Officials with the employers in the food industry said a cut of the VAT would result in 5 to 14 percent smaller prices. The proposal to cut VAT was made by the Social Democrat Party (PSD), Romania's largest opposition group.

PSD also proposed for the pensions under 1,500 lei (412 euros) to be tax exempted and the increase of the excise taxes for luxury goods and tobacco. The proposal was not backed by the government.

The PSD members who sustain the measure argue the VAT for basic foodstuff in several European Union countries rises to maximum 5 percent. Both the Greater Romania Party (PRM) and the Conservative Party sustained the VAT cut.

The Senate approved PSD's idea after 45 votes were cast in favor and 16 against. The proposal will be debated by the Chamber of Deputies, which will make the final decision.


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