As an example of the above, we can mention the implementation of taxes or its elimination, which, as the case may be, may guide spending or consumer preferences. It can also restrict the consumption of certain unwanted goods or services, or be one of the tools to consider when you have to attack the general increase in prices.
In recent weeks, news has emerged in the international arena that go in the direction of tax changes. In UruguayPresident Luis Lacalle Pouafter the referendum at the end of March of this year on the elimination of some of the articles of the Emergency Law, seeks to reform issues related to security, education, labor relations, and other issues.
In addition, fiscal measures are implemented to combat inflation, such as the freezing of the price of some products, and the elimination of VAT on others, such as flour and oil. In fact, There was already a similar measure that reduced this tax on strip roasts. It will be necessary to review whether this change in VAT has an impact on the price reduction (one assumes that it does, although it is not an immediate effect).
In the Netherlands, there is a proposal with a package of measures aimed at reducing the levels of obesity in the population. The proposal includes measures ranging from allowing municipalities to prohibit the opening of certain fast food establishments, to the introduction of a new tax on certain products with high sugar content (“sugar tax”), and the reduction or elimination of the VAT that falls on fruits and vegetables. The concern is such that some proponents of these measures maintain that they should be implemented immediately, leaving some technical discussions for later, such as What should be understood as fruits and vegetables? or does it include canned?
The proponents argue that “everyone knows what fresh fruits and vegetables are”, and they don’t want to wait any longer. Without going into technical aspects, it seems a good measure to encourage the consumption of healthy products, to the detriment of others that may be harmful to health. Lower taxes to lose a few kilos!
The objective of reducing the price in the desired proportion is not always achieved. Many times it is not enough to exempt taxes so that the prices of the products fall: even though there is no “tax debit” with the sale, the “tax credits” of purchases cannot be taken, and this effect increases the cost of the product for the businessman.
Also, let us remember that Argentina had, in 2019 and for a limited period, its experience in reducing VAT to 0% for certain basic basket products, but that a modification to the original decree was necessary, so that the sellers of these products could allocate some destination to the credit balance that was generated by their purchases as they did not have sales taxed by the tax.
With this we already know that taxes are not only used to collect, and now it’s time to decide: go for a run or request a VAT reduction on healthy foods? We could think of both.
Head of the UADE Tax Laboratory.
Source: Ambito
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