A new agreement to cut VAT (moms) on food was presented by the government on Wednesday. The deal could make it cheaper to buy food at Danish supermarkets from 2028.
VAT on food will be reduced from 2028 under the agreement, with six billion kroner of state funds budgeted annually to fund the measure.
Several elements of the agreement are yet to be confirmed, including whether the VAT cut will apply to all food categories or be restricted to fruit and vegetables.
The Liberal (Venstre) party wants a reduction from the current 25 percent to 20 percent on all food items, while coalition partner the Moderates wants VAT to be completely eliminated from fruit and vegetables.
The Social Democrats, the senior partner in the coalition, remains undecided but prefers a general reduction, news wire Ritzau reports.
“We are now initiating work that will put forward proposals on how this can be done well,” Finance Minister Nicolai Wammen said at a briefing.
Economists have expressed doubt over plans to introduce differentiated VAT instead of the current flat rate of 25 percent, saying it will be an administrative burden for businesses and authorities, with costs passed on to consumers.
Wammen stressed that the aim of the measure will be to “make full shopping baskets cheaper.”
“I can say that when six billion kroner is set aside to reduce VAT, that will of course also have an impact on prices,” he said.
Several opposition parties are backing the plan to cut VAT in 2028, including the left-wing Red Green Alliance, Alternative, SF and Social Liberals, and right-wing Conservatives and Denmark Democrats.
Earlier this week, the government announced tax-free cash payouts this summer to eligible groups, aimed at helping with high food prices.
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