Reducing VAT on food does not mean reducing food prices, but why?

Reducing VAT will not bring lower food prices. Foreign concerns control the cost of food in the Czech Republic. The solution, according to the economist Ilona Švihlíková, would be responsible political decisions.

According to economist Mojmír Hampl, the current critical economic issues are the result of politics. “This year, it is built on the fact that everything will be nicer. But lunches are not free. We have to pay for them, ” mentioned Mojmír Hampl.

Švihlíková also agreed. “Foreign concerns control food prices in our country. Our farmers are not doing well. They are not earning anything. Reducing VAT on food does not mean reducing food prices. They put it in the margins. It is not a panacea. There is a strong position of foreign chains; potatoes were bought in the spring, ” she said.

Hampl also agreed in principle. “Indirect taxes have an impact on the price of the final product. That is why they are excluded from inflation targeting. The Czech National Bank (CNB) can not influence them, “he explained.

But according to Švihlíková, prices are not only rising in the Czech Republic.