- VAT Reduction Announcement: A 50% reduction in the VAT rate on all food sold in food stores, lowering it from 10% to 5%, effective April 1st.
- Scope of VAT Reduction: The reduced VAT rate applies to all food items in stores, including fresh produce, baby food, and frozen foods, but excludes prepared foods in delis.
- Impact on Fiscal Targets: The VAT reduction will not affect the government’s fiscal targets for the year, aiming to provide financial relief without compromising economic stability.
- Previous VAT Rates: The VAT rate was previously lowered from 12% to 10% in response to economic conditions, rather than increasing it to align with regional rates.
- VAT as a Factor: While acknowledging that VAT is not the sole cause of high food prices, the reduction aims to alleviate financial pressure on households with tight budgets.
- Long-term Economic Strategy: The government aims to shift the tax burden to those who can afford it, while implementing measures to improve VAT compliance among larger companies.
Source A National Address from Prime Minister Philip Davis – Office of the Prime Minister
