VAT reduction policy ‘very successful’ says state

The government’s policy of reducing the VAT rate, in some cases to zero, on various everyday products, has been “very successful”, according to the Consumer protection service’s director Constantinos Karagiorgis.

Speaking in a radio interview on Thursday in light of the government’s latest decision to add coffee and sugar to the zero-VAT list, he said the service’s research has shown that three quarters of products with reduced or zeroed VAT rates have not seen their retail prices increase since the start of the scheme.

In addition, he retorted that he now drinks his coffee “five per cent cheaper”.

However, Marios Drousiotis, chairman of the consumers’ association, expressed concern that retail prices of coffee and sugar may increase before the VAT reduction comes into force.

Drousiotis said that this trend was observed when the VAT rate on other products was reduced at the beginning of May and added “some people should have learnt from their mistakes and not announce in advance which products will have their VAT zeroed”.

He also criticised the decision to only add two products to the zero-VAT list, saying a “double-digit number” of products was expected to be announced.

Additionally, he called on the government to restore the fuel subsidy, which was removed on July 1.

Coffee and sugar are set to be added to the list of VAT-free products on October 1.