Supermarkets to Lower Prices with Reduced VAT, Excluding Beverages

The planned reduction of value-added tax (VAT) on food products from 15% to 12% will be fully reflected in prices, according to the President of the Trade and Tourism Association of the Czech Republic, Tomáš Prouza. This move is expected to result in a 3% decrease in food prices starting from January 1st.

Tomáš Prouza, the President of the Trade and Tourism Association of the Czech Republic, assured the public that the upcoming VAT reduction on food products would be directly passed on to consumers. This means that supermarkets and retail chains will adjust their prices accordingly, resulting in more affordable groceries for everyone. It’s a positive step towards improving the cost of living for households nationwide.

However, it’s important to note that the reduction in VAT will not apply to non-alcoholic beverages. These products will continue to be subject to the standard 21% VAT rate. Additionally, the excise tax on spirits will increase by 10 percentage points. These adjustments aim to balance the impact on the overall shopping basket and ensure a fair distribution of the tax changes.

While the reduction in VAT on food is expected to relieve consumers, the government and analysts carefully monitor whether retailers will entirely pass on the savings to customers. The aim is to ease the financial burden on households and stimulate consumer spending. The government estimates a decrease of 12.9 billion CZK in revenue for the budget next year due to the VAT reduction, and it remains to be seen how much of this will directly benefit consumers.

In addition to food products, the reduced VAT rate of 12% will apply to certain items such as construction work, children’s car seats, and select medical aids like glasses. On the other hand, the VAT rate on draft beer, hairdressing services, and newspapers will increase from 10% to 21%. The government aims to generate additional revenue through these changes, which will contribute to funding various public services and initiatives.

Lowering VAT on essential goods and services is a step towards improving consumer affordability and boosting economic activity. Businesses need to uphold their responsibility and ensure that the benefits of reduced VAT reach the households that need them the most. By actively monitoring the market and advocating for fair pricing, consumers can play a role in encouraging transparency and ensuring that the intended cost savings are realized.