Reduced VAT rate on fruit and vegetables has led to increased consumption of imported products - Krauze

RIGA - The reduced rate of value added tax (VAT) on fruit and vegetables in Latvia has increased the consumption of imported products, Agriculture Minister Armands Krauze (Greens/Farmers) said in an interview with the Latvian public radio on Thursday.

He pointed out that this year the period when the reduced VAT rate was applied to fresh fruit and vegetables in Latvia would come to an end, and the next year's budget foresees the full VAT rate for fruit and vegetables.

Krauze also mentioned that one of the objectives of this reduced VAT rate was to help local producers and eradicate the shadow economy. "Prices did not fall, which had a very good effect on local producers, and the shadow economy has been eradicated," the minister said.

Asked whether Greens/Farmers planned to propose a reduced VAT rate of, for example, 0 percent for certain food products in the future, as the party had mentioned in the past when working in opposition, Krauze said that this would be discussed. "It will be a joint collegial decision. If we manage to convince our colleagues, then there will be such a rate for some other products," Krauze said.

The minister also pointed out that with regard to the reduced VAT rate, it should be assessed whether such a rate is helping imported products. "Imported produce has seen a huge increase in fruit and vegetables. In fact, by reducing the VAT rate, we have also encouraged the consumption of imported produce in Latvia, but this is not our goal," Krauze said.

As for the proposal of previous agriculture minister Didzis Smits (United List) to close the supermarkets on weekends, Krauze said that there are two important aspects in this case, including the economic one, i.e. what the country gains from this decision, as well as the opinion of the population. "I think this issue is not closed," he said, while adding that tackling this issue would not be his top priority.

It has already been reported that the Saeima earlier rejected a proposal by opposition MPs, including Greens/Farmers, to apply a reduced VAT rate of 5 percent to fresh meat, fresh fish, eggs and dairy products.