Gov't plans to reduce value-added tax on food to lower inflation
by Hazal Ateş
ANKARAMay 12, 2016 - 12:00 am GMT+3
by Hazal Ateş
May 12, 2016 12:00 am
The government has initiated a comprehensive study on production, trade and distribution channels to reduce the inflation that stems from food prices. As a part of the study, which is being jointly carried out by the Food, Agriculture and Livestock Ministry, Customs and Trade Ministry and Finance Ministry, the government will take a series of major steps including a value-added tax reduction in red meat and the reduction of cost items that emerge in intermediate stages as a product reaches customers from producers. The study will remove rigidity in service prices stemming from food bills, reduce the existing value added tax of 8 percent in red meat, encourage livestock raising in villages, prevent artificial prices and establish a product stock exchange.
The Agricultural Products Market Monitoring Committee is maintaining its examinations of food prices, which the Central Bank of the Republic of Turkey (CRBT) counts among the most important factors causing inflation. New regulations are being made in trade, particularly in the wholesale market, and all relevant laws are being revised. The steps that will be taken to reduce food and meat prices are: the rigidity in service prices stemming from food bills will be removed; small producers will be encouraged to unite; studies to reduce high meat prices have been accelerated; and in addition to the ceiling price practice, there will be a value added tax reduction in mincemeat and meat cubes prices.
It is planned that the existing value-added tax of 8 percent will be removed. Sector representatives suggest that this might lead to a reduction of some TL 4 ($1.3) or TL 5 per kilogram of mincemeat and meat cubes. The costs that emerge in all stages as a product reaches customers from producers will be reduced. People will be encouraged to raise livestock in villages and incentives for husbandry will be increased. Moreover, the efficiency of the Meat and Milk Authority will be boosted; authorized to regulate the red meat market and increase the number of staff in the field.
Also, the Food Committee, which is represented by the CRBT, will become stronger. The committee will examine food prices in the market, make a list of deadlocks in the sector and take solution-oriented steps. It will present alternatives to prevent artificial prices. The process between farm and supermarkets will be monitored through the wholesale market registration system. During the stock follow-up, various measures, including imports, will be taken in products which will see a price increase. The number of links in the marketing process that lead to high prices is falling.
The brokerage in the wholesale market system will be organized and regulations will be made in logistical activities. The parcels of land located on agricultural estate will be registered. A product stock exchange will be founded. Government bonds will be received for nuts and other products. The Agricultural Products Office will be able to intervene in markets by selling products. The Competition Authority will come into play regarding prices as needed. Also, companies that increase prices artificially will be closely monitored.