VAT cut for bread targets tax-evasion not lower prices

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Bread producers do not target a price drop after the reduction of the VAT quota, but the diminishing of tax evasion and the increase of budget incomes, and lower prices will only be a consequence of the measure, the president of the Rompan employers’ organisation, Aurel Popescu said in a forum on agriculture, quoted by Mediafax. Representatives of the bread industry say that the black market of bread reached 70 pc of the total output and threatened with a fiscal strike last week if the VAT is not reduced from 24 pc to 9 pc and if the state does not check and punish the producers that work on the black market. The total bread market in Romania is estimated at EUR 1.5 bln, of which 70 pc is the black, non-fiscalised market, the president of Rompan warned Thursday. He said that the tax evasion of over two thirds of the market makes the state lose almost EUR 300 M a year. The tax evasion of Hungary and Bulgaria will relocate to Romania if authorities do not extend reverse taxation of cereals and oil plants. The president of Pro Agro, Alexandru Jurconi warned. He added that the exports of horsemeat and beef dropped near zero following the horsemeat scandal which also involved Romania, although the meat was not delivered by local producers, the biggest demands coming previously from France and Italy.