site.btaAustrian Parliament Approves VAT Cut on Basic Food Products

Austria’s parliament on Thursday approved the government-proposed reduction of VAT on basic food products. For goods such as butter, eggs, milk, rice, pasta, bread, wheat flour and most types of fruit and vegetables, the VAT rate will be reduced from 10% to 4.9% as of July 1.

The measure is expected to help households save an average of EUR 100 annually, but at the same time state revenues are projected to decrease by around EUR 400 million per year. It has not yet been decided how these funds will be compensated. Among the measures under consideration is the introduction of a EUR 2 fee on postal parcels, although expert assessments are still ongoing.

Opposition parties criticized the newly adopted measure. Alexander Petschnig, an MP from the Freedom Party of Austria, predicted that the VAT reduction would either be repealed for legal reasons or due to budgetary difficulties, while the planned fee on postal parcels would remain in place. According to the Greens - The Green Alternative, the measure is not socially balanced and is insufficient.