Proposed 5% reduced VAT rate on fresh fruit, vegetables and berries

In order to encourage people to adopt healthier diets, 27 MPs from different political groups are proposing a 5% reduced rate of value added tax (VAT) on fresh fruit, vegetables and berries. 

Based on the experience of Latvia, Poland, France and Germany, the politicians hope that the tax reduction will boost local agriculture, increase sales of vegetables, fruit and berries, and reduce the shadow market. The proposed VAT relief is also expected to contribute to disease prevention.

One of the initiators of the project, Tomas Tomilinas, a member of the Seimas Democratic Group "In the name of Lithuania", notes that Lithuania ranks only 25th among European countries in terms of healthy life expectancy and is significantly behind the average.

„In Lithuania, the healthy life expectancy for men is just over 58 years, for women it is 62 years. It is clear that investment in the health system alone will not be enough to change the situation. On the contrary, – we need to pay more attention to the prevention of diseases, contribute to the formation of healthy habits of the population“, – T. Tomilinas told Elta.

According to the democrat, the experience of neighbouring Latvia proves that the preferential VAT rate is an appropriate instrument. According to the MP, the 5% tax on fruit and vegetables introduced there in 2018 has brought positive changes: in the first year, trade in fresh fruit and vegetables grew by 9%, and income from trade increased by €13 million, despite the preferential rate.

T. Tomilinas agrees that the reduction may have an impact on the budget's revenue collection, and that VAT revenues will be slightly lower, but in the long term, he believes that this policy is worthwhile for the state.

„We are currently discussing the introduction of an additional sugar tax, which should reduce the amount of sugar consumed by the population. In my view, these two tax tools are perfectly complementary: a tax on food that is harmful to health and an exemption for health products. It is really important to make efforts at the national level to ensure that the population is able to afford health foods," says Tomilinas.

The amendments to the Law on VAT on fresh fruit, vegetables and berries sold in Lithuania were supported by the Democrats „Vardan Lietuvos“ and their leader Saulius Skvernelis, the Speaker of the Seimas, as well as by the representatives of the Social Democrats, the representatives of the „Nemunas aušros“,  Lithuanian Peasants' and Green Party-Christian Families' Union groups.

It is proposed that the amendments to the VAT law, which are planned to be registered in the near future, will enter into force on 1 January next year.