Lithuanian president says VAT cuts will raise supermarket profits, not benefit consumers

Dalia Grybauskaitė
DELFI / Domantas Pipas

“We are talking about rising prices and part of the society not being able to afford basic food products. There are many studies, including by the European Commission, suggesting that VAT cuts usually benefit producers and supermarkets. Consumers get between 15% and 30%,” Grybauskaitė said on Thursday.

PM Algirdas Butkevičius, Finance Minister Rimantas Šadžius and the ruling Social Democratic Party recently agreed to propose cutting VAT on meat from 21% to 5% or 9%. They say the measure is aimed at bringing prices down for low-earning consumers.

The president believes, however, that the better approach would be raising income for low-earners.

“If we want to support everyone, even those who can afford (food products), then it’s a political decision, as long as we have money for that. However, I would use resources to benefit those who are worst-off, the least-earning people. We could do that by raising tax-exempt income, raising salaries,” Grybauskaitė said.

She added that VAT cuts would mostly benefit food producers and retailers.

“If we want to raise the profits of supermarket chains, the best way to do it is by cutting VAT,” the president said.

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