Is 0% VAT on basic products possible?

FOCUS – This is one of the seven measures expressed on Friday evening in Cyril Hanouna and Marlène Schiappa’s show on C8. What are we talking about ? Would 0% VAT benefit consumers? Are European countries applying it? Explanations.

Among the seven proposals that emerged after the show “Balance ton post” co-hosted on Friday evening by Marlène Schiappa and Cyril Hanouna, one particularly caught the attention: zero VAT on basic products, the measure that will be proposed government, like the other six, was chosen by 26% of the show’s viewers. ‘excludes Emmanuel Macron.

• What are the basic necessities?

Strange as it may sound, there is no official definition. These are goods for which the VAT rate was not increased from 5.5% to 7% in 2011 by the Fillon government. For example, we find “products intended for human consumption” (bread, eggs, meat, fish, fruits and vegetables, sugar, chocolate, non-alcoholic drinks, etc.) but also gas and electricity subscriptions, books. , movies and even condoms.

• What are the VAT rates?

: the normal rate of 20% (furnished accommodation), the intermediary at 10% (transport, catering, renovation work on housing or hotels), the reduced rate at 5.5% and the special rate at 2.1 % (drugs reimbursed by Social Security, contribution to public broadcasting, press publications). Today, basic necessities are therefore taxed at reduced rates. The “yellow vests” demand not only that these goods are no longer taxed but that they cover more products such as clothing for example.

• Can France apply 0% VAT on basic products?

The answer is no. For basic necessities, France already applies a reduced rate, as we saw above. However, “the reduced rates are set at a percentage of the tax base which may not be less than 5%”. However, among the 28 countries of the European Union, three countries apply a 0% VAT on basic food products: Ireland, Malta and the United Kingdom,. These three States were already applying it before January 1, 1993, when the Single European Market entered into force. Each Member State has the possibility of applying a specific (or super-reduced) rate to certain products or services. But France, where this rate is 2.1%, has decided to apply it to drugs reimbursed by Social Security, to the press or even to the audiovisual license.

• What does the government think of a reduction in the reduced rate of VAT?

Secretary of State for the Civil Service Olivier Dussopt believes that reducing VAT on basic necessities would not be “very effective” in increasing purchasing power. “Basic necessities” are not, by definition, very expensive products on a daily basis. On products at two, three or four euros, if you reduce the VAT, even by half, it’s a few cents (earned), he said last week on LCI. Perhaps, we can say “that’s always what it takes” but is it significant, can it be felt in everyday life? I do not believe that”.

• Would lowering VAT benefit consumers?

The general rapporteur of the Finance Committee does not believe it. “The essential problem in the event of a decline is to ensure that the reseller (the trader) does not take advantage of it to increase his margin to the detriment of the consumer, which has already been done in large distribution groups”. VAT is expected to bring in 185 billion euros to the State in 2019,,. One less reduced VAT point would be equivalent to 2.6 billion euros less for the state coffers, according to the Economic, Social and Environmental Council.

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