Finance Minister Rejects Proposal to Lower VAT on Foodstuffs

In a recent statement, Finance Minister Markus Marterbauer, representing the Social Democratic Party (SPÖ), has dismissed the suggestion made by WIFO Director Gabriel Felbermayr regarding a reduction in the value-added tax (VAT) on food items. Marterbauer stressed that combating inflation remains a top priority for the current government. His office indicated that continuing strict budget enforcement is essential for stabilizing the national budget, and therefore, a VAT reduction is deemed financially unfeasible.

Felbermayr had proposed during an ORF press conference to lower the reduced tax rate on food from ten percent to five percent. He pointed out that several European Union countries, including Italy and Germany, maintain lower VAT rates on food. Felbermayr argued that Austria's current VAT on food is relatively high.

However, Felbermayr also warned of potential risks associated with a VAT reduction on essential goods, suggesting that it could lead to an increase in the standard tax rate, thereby exacerbating inflation. Marterbauer's office echoed this sentiment, noting that if the VAT were halved for certain products while raising it for others, the overall impact on inflation would be negligible.

In light of the current economic situation, officials have reiterated the importance of implementing existing government measures aimed at curbing inflation, such as the EU-wide initiative against Austria's higher pricing and a ban on shrinkflation. The government is committed to executing these strategies promptly.