Food more expensive than January?

Basic food items - flour, bread, oil, salt - could go up in price from five to 15 cents from New Year's, if the Ministry of Finance or deputies do not soon propose, and the Assembly does not adopt, an extension of the current zero or lower tax rate on these products.

From the department managed by the Minister of Finance Aleksandar Damjanović "Vijesti" emphasized that the practice showed that the measures to reduce the value added tax (VAT) did not lead to a significant drop in the prices of the mentioned products (only five cents per loaf of bread), and that the directives of the European Union defined that the basic foodstuffs (bread , flour, oil) can be taxed at a reduced VAT rate, not at zero.

"The Ministry of Finance has not yet proposed extending the validity of the zero rate on those products until a complete review and analysis of the effects so far. In any case, the Ministry of Finance monitors market developments and, based on adequate analyzes and the needs of citizens, a decision will be made in the coming period regarding the validity period of the measures in force", said the Ministry.

On May 5, 2022, the Parliament passed the Law on Amendments to the VAT Law, which prescribes a reduction in the tax rate for the turnover and import of sunflower flour and oil from seven to zero percent and salt from 21 to seven percent, while amendments to the law of June 21 apply a measure whereby the sale of bread and flour is also taxed at a zero rate.

These measures are valid until December 31, 2022.

In addition, VAT on heating pellets was reduced from 21 percent to seven percent, but this measure is valid until the end of next year.

The government submitted amendments to the existing VAT Law to the parliamentary procedure, but they do not foresee, at least for now, the extension of the validity of zero and lower rates on basic foodstuffs.

According to the data of the Ministry of Finance, the current retail prices of flour and bread at the zero tax rate amount to 75 cents, and it is planned that as of January 1, the VAT will be 14 percent, which would mean a price increase of five cents each. According to the plan, the VAT for oil will be seven percent instead of zero from the New Year, so the price could be XNUMX cents higher than the current two euros.

The existing VAT rate on salt will increase from seven percent to 21 percent, which means an increase of five to seven cents per kilogram.

The Ministry of Finance announced that the estimated fiscal effect of the reduction of the VAT rate on food products, according to the analysis, on budget revenues is about four million euros annually, which means that the adopted measures represent tax expenditure of the state.

"A significant amount of money was allocated through the adopted support measures, and in this way the state invested in spending segments of the greatest importance for preserving the purchasing power of citizens, with the aim of preserving the living standards of families and protection against inflationary shocks," the ministry announced.

Lower excise duties on fuel cost the state 37 million euros

The Ministry of Finance, when asked whether the reduction of excise duty on fuel will continue after January 3, 2023, and if so, whether they have an estimate of how much it will amount to, indicated that it will depend on the movement of the prices of oil derivatives on the world market, i.e. in depending on market disturbances and possible fuel price increases, as well as the impact of these changes on the state budget.

In May, the Parliament passed amendments to the Law on Excise Taxes, which gave the Government the possibility that, in the event of a significant increase in the price of mineral oils on the world market, it can make a decision to reduce the amount of excise duty by up to 50 percent, for unleaded gasoline and gas oils, for a period of up to three months.

The decision to reduce the amount of excise duty by 40 percent was applied from May 10, and from June 7 it was further reduced, to a total of 50 percent.

That decision was subsequently amended on October 27, when a 40 percent reduction in the excise duty was prescribed for the period from November 8 to December 6, 2022, while the same decision prescribed a 25 percent reduction, which will be valid until January 3. in 2023.

"The previous seven-month reductions in excise duties on fuel, in the interest of citizens and the economy, cost the state budget 37 million euros, which is how much less the revenue was on this basis compared to the comparable period last year," the Ministry announced.