Finance Minister of Estonia asserts that slashing Value-Added Tax on food items would primarily benefit merchants, not the general public.
In Estonia, the debate over reducing Value-Added Tax (VAT) on food products has taken centre stage, with arguments for and against the move revolving around social equity, consumer budget pressure, and budgetary concerns.
On one side of the argument, proponents argue that the current 24% VAT on food (one of the highest in the EU) increases inequality and strains consumers' food budgets. This view is supported by a large public petition, which has gathered over 80,000 signatures by late July 2025, highlighting widespread citizen concern. Opposition parties, including the Conservative People's Party, the Center Party, and the Social Democratic Party, support reducing the VAT rate, with proposals such as lowering it to 10% or even 9% to alleviate pressure on consumers, especially lower-income groups.
However, Finance Minister Jürgen Ligi (Reform Party) strongly opposes lowering VAT on food, arguing it would mainly benefit retailers rather than consumers. He calls such discussions populist. Kristina Kallas, chair of Eesti 200 and Minister of Education and Research, stresses that the state lacks the financial resources to lower VAT on food due to budget constraints. The government’s stance is that lowering VAT would have a significant budget impact, which they find unaffordable.
The head of the Food Industry Union, however, supports the initiative to reduce VAT on food products. Jurgen Ligi also mentioned that the tax cut would cost the Estonian budget approximately half a billion euros. This estimated cost does not seem to have been factored into the Prime Minister's stance on VAT reduction.
The Prime Minister's stance on VAT reduction contradicts the Finance Minister's view and may face opposition from the public support already gathered. The initiative to reduce VAT on food products has already garnered 80,000 signatures, indicating strong public support. The Prime Minister's statement on VAT reduction may lead to further discussions and debates within the Estonian government.
This controversy could potentially impact the progress of the initiative to reduce VAT on food products. As the debate continues, it remains to be seen whether Estonia will lower its VAT on food products and how this decision might affect its citizens and economy.
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- The ongoing debate in Estonia's political sphere, centering on reducing Value-Added Tax (VAT) on food products, has drawn connections between business interests (retailers), finance concerns, and public opinion, as demonstrated by the 80,000-strong petition.
- The stated positions of various Estonian political parties, advocating for a VAT reduction, mirror those of opposition parties in the realm of general-news, emphasizing concerns over social equity, consumer budget pressure, and the plight of lower-income groups.
