Price of food may come down also in restaurants and cafeterias

EU ministers seek agreement; possible decision on VAT in March

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Finland and the rest of the EU countries may lower the value added tax also on restaurant food. According to information obtained by Helsingin Sanomat, the finance ministers of the EU nations will try to agree on the time schedule in which to decide on the matter this Tuesday.
      The actual reduction in VAT would probably take place in March at the earliest.
     
For years the EU countries have wrestled with the subject of standardising their approaches towards VAT.
      For example the tax related to the restaurant trade is apparently now being discussed for the seventh time in a ministerial-level meeting.
      On Tuesday the finance ministers will try to agree on whether this reform could be decided on now or if it should be bundled together with the amendments to taxation on environmentally friendly products.
      In the latter case the VAT-lowering decision would not be likely to materialise this spring.
     
In Finland a decision has already been made to lower the VAT on food sold in grocery stores from 17 per cent to 12 per cent from October. For quite some time now, the restaurant sector has demanded equal tax treatment.
      According to the restaurant and cafeteria trade, VAT should be lowered also in restaurants and cafeterias. The branch fears, among other things, that their lunch sales might start shifting to grocery stores owing to the advantage brought on by the lower VAT there.
      After the coming autumn’s tax reduction it will be possible to purchase a lunch portion from a grocery store with a 12% VAT attached to it, while VAT for a restaurant lunch would remain at 22%.
     
The restaurant trade believes that the lowering of VAT would help the branch to employ more people. According to the trade's estimate, the tax reduction would benefit not only the retail, wholesale, processing, cafeteria, and restaurant businesses, but also the customers.
      In addition to the present economic situation, what also puts a strain on restaurants’ profitability and customer throughput is the January hike on tax on alcohol.


Previously in HS International Edition:
  Finance Ministry: lower taxes, less inflation; recession can be avoided (19.11.2008)
  Alcohol tax going up next year (19.11.2008)
  IMF recommends smaller tax cuts for Finland (4.11.2008)

See also:
  Budget talks: VAT on food to be cut in 2009 (31.8.2007)

Helsingin Sanomat