Reducing the VAT rate on fruit and vegetables to zero percent is legally complicated, costs a lot of money and provides little health benefit. This is evident from a report by SEO Economic Research, sources confirm on Wednesday NRC after reporting RTL News. The outcome of the study, commissioned by the Ministry of Finance, puts pressure on the government’s plans to reduce VAT from nine to zero percent in 2024.
To encourage healthy eating, the government has included in the coalition agreement the aim of reducing VAT on fruit and vegetables to zero. To do this, it first had to be determined which products would fall under the zero rate and which would not. According to Prime Minister Mark Rutte (VVD), it was not that easy. In the Senate last year he cited a jar of pasta sauce as an example: should VAT on processed fruit and vegetables also be abolished?
The researchers of SEO Economic Research now state that any possible variant will probably lead to legal discussion from producers who believe that they should also fall under the zero rate, writes RTL Nieuws. The sale of fruit and vegetables will also increase only “limitedly”, at best by 4 percent. At the same time, the abolition of the VAT rate costs the Dutch treasury between 550 and 950 million euros annually.
As an alternative to the zero rate, the researchers suggest, among other things, a higher tax on unhealthy food, a so-called sugar tax or fat tax. This should lead to consumers buying less unhealthy food and manufacturers making their products healthier. Information campaigns and restrictions on advertising unhealthy food are also suggested in the report to promote healthy food.
State Secretaries Marnix van Rij (Tax and Tax Administration, CDA) and Maarten van Ooijen (Public Health, ChristenUnie) have not yet responded to the investigation. Their response is expected before the summer.
A version of this article also appeared in the newspaper on March 30, 2023