Researcher: Estonia should lower VAT on food to 5 percent

Dmitri Teras from Tartu University’s faculty of economics writes in Äripäev that Estonia should consider cutting VAT on food from the current 20 percent to 5 percent.

Germany, for instance, charges 7 percent VAT on food items while the rest of goods are taxed at 19 percent.

Estonia could charge lower VAT on food than Germany simply because our income is not comparable to Germans.

At present, however, food in Estonia is subject to one of Europe’s highest VAT rates.

Estonia could also adapt the German legislation on food VAT with minor adaptations. As we saw when the government decided to increase VAT, all it takes is political will.

Toomas Hõbemägibbnatchararipaev.ee