Study: Finnish food would be relatively expensive even without VAT
PTT compares Finnish prices with those in other European Union countries
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Finnish food would be the fifth-most-expensive in the European Union, even if value added tax were lifted completely.
While tax-free food would still be somewhat expensive in Finland, the price difference with the old EU countries would decline significantly, at least in some product groups.
If VAT were removed in all EU countries, Finland would be fairly close in food prices with Belgium, Italy, Cyprus, Britain, Sweden, Austria, France, and Germany.
If VAT is removed from the equation, the only EU countries where food is more expensive than in Finland would be Ireland, Luxembourg, Denmark, and Belgium. Currently only Denmark and Ireland rank as more expensive according to the consumer price index.
The information is based on calculations by the Pellervo Economic Research Institute, which calculated what food would cost in various EU member-states if VAT were removed from the prices.
At present the VAT rate on food is 17 per cent, but it is set to go down in early October to 12 per cent. Many economists have criticised the decision, saying that a cut in VAT is the wrong move at the wrong time, considering the shortfall in tax revenue.
Food prices in the EU are highest in the old member-states. Food is cheapest in the new additions to the Union, such as Romania and Bulgaria.
Food in Ireland is in a class of its own, and Ireland does not even charge VAT on food.
PTT also calculated which products would be expensive, and which would be cheap without VAT.
Bread, other grain products, vegetables, and fruit are clearly more expensive in Finland than in other countries. In the case of bread and cereals, Finland is behind only Denmark and Ireland in terms of index cost, while for fruits and vegetables the only EU countries more expensive are Ireland, Luxemburg, and the UK.
Closest to the average European level are Finnish prices for meat, milk, dairy products, and eggs.
Retail prices of dairy products are nearly at the EU average, even though the price paid to producers of milk is significantly higher than in other parts of Europe on average.
The untaxed price of meat in Finland is significantly cheaper than in Denmark, which is a major meat producer in Europe. Denmark has Europe’s lowest producer price for pork.
Helsingin Sanomat
