Taking immediate measures to drastically reduce the high cost of food in Greece, including imposing zero VAT on dietary staples.
Food in Greece in 2015 cost more than the European average for most categories of basic food, in spite of the fact that, according to Eurostat figures, Greece is an important rural economy within the EU and it has experienced six consecutive years of memorandum-induced recession, legions of unemployed and poor and the loss of 25% of its GDP.
While the average per capita income in the country is less than 60% of that of the EU, dairy products and eggs are 31% more expensive than the Community average, making Greece the second most expensive Member State when it comes to buying from this product category. Prices for bread and cereals, which are basics, remain high: they are 14% more expensive than the Community average.
This high cost is down to high taxation, as VAT has skyrocketed for most of the aforementioned products, which has given rise to a food security problem for a large proportion of the population and encouraged tax evasion.
What measures will the Commission take to contribute, in collaboration with the Greek authorities, to the drastic cutting of food prices in Greece, including the imposition of zero VAT on dietary staples?
| Answer given by Mr Moscovici on behalf of the Commission | ||||||||
| Higher prices on food can be due to various factors, taxes including VAT being only one of them. Differences in absolute food price levels between Member States will also depend for example, on the net trade position of each Member State, the structure and the functioning of the food chains.
As for VAT, the VAT Directive(1) allows Member States, without any obligation, to apply one or two reduced rates of a minimum of 5% to foodstuffs(2). Within this basic framework, it is up to each Member State to set its rates, without prior authorisation, in accordance with its fiscal or budgetary policy and other national objectives. There is currently no plan to introduce a zero VAT rate in respect of foodstuffs, although the Commission has proposed greater flexibility in the recent Action Plan on VAT(3). The increases in VAT rates since 2010 in Greece have been proposed by the Greek authorities to help achieve the fiscal targets agreed under the adjustment programmes. However, it is not clear that the higher VAT rates in place since 2010 are responsible for the comparatively high prices in Greece for the products mentioned: In 2009 dairy products and eggs in Greece were already 33% more expensive than the EU average, while bread and cereals were 18% more expensive. It is also relevant that food prices as a whole in Greece are only slightly more expensive (2.7%) than the EU average in 2015. The comparatively high prices in Greece of the food sub-categories referred to are likely to reflect structural rigidities in these specific product markets that could be addressed in the context of the structural reforms proposed by the authorities in their growth strategy.
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