Countries in Europe are introducing various measures to restart consumption, such as Germany reducing the VAT rate on food. According to the Minister of Finance, however, this would have no effect on the price in shops in the Czech Republic.
“I am fundamentally against reducing VAT on food, because if we reduced it, if I ignore the fact that it would be tens of billions of crowns, then who would have the money left? They would remain in the chains, which is absolutely something that we will not allow here in any case, “Schiller warned.
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The tax would be lower, but people would pay the same
Economist Ilona Švihlíková also confirmed this. He claims that when VAT in the Czech Republic increases, it is immediately reflected in prices. On the contrary, if they decrease, prices will remain the same according to Švihlíková. “I am afraid that what the minister says would happen, that prices would not fall, but would go to margins,” she added.
According to the Minister of Finance, there is no guarantee that the chains will share the money. However, she denied that Germany would subsidize retail chains with this move. “They (retail chains) in Germany will not afford what they will afford in the Czech Republic,” she added.
Schiller: Grocery stores have mainly benefited from the pandemic
Schiller also pointed out that retail chains in the Czech Republic have very high food margins. “If anyone made money on a pandemic, it was mainly food chains. It’s time for them to share with people and for those margins to be reduced and reflected in the price of food, “she said.
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However, the minister rejected the price regulation that Austria, for example, is now planning. “It is something that is not common in a market economy to regulate prices. But if you say that they want to go this way in Austria or Poland, I will be happy to meet you, “she added.
The chairwoman of the National Budget Council, Eva Zamrazilová, pointed out that there are not as many foreign retail chains in Germany or Austria as in the Czech Republic. “They would leave it to their home (chains), that’s the huge difference,” she warned.
The lane: Lower VAT is a better way than mandatory quotas in shops
The President of the Confederation of Trade and Tourism Tomáš Prouza has previously stated that reducing VAT on food from fifteen to ten percent would be a better solution than, for example, the mandatory minimum amount of Czech food on store shelves.
Prouza also pointed out that in the Czech Republic, VAT on food is now the fourth or fifth highest in Europe. He would like to reduce VAT from January 1, 2021. “Today, we are only in a perverse situation for me, when VAT on beer is lower than on bread,” he said recently on Czech Television.
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It’s not about helping Smartwings, the minister said
In Questions of Václav Moravec, the Minister of Finance also refused to provide a state guarantee for the airline Smartwings. She said that the government had not discussed anything similar and that such a proposal is not currently on the table. Minister of Transport and Industry and Trade Karel Havlíček (for YES) talks about help.
According to him, the state is negotiating with Smartwings a guarantee of 500 to 900 million crowns for loans to help the company overcome the effects of the shutdown during a pandemic. The condition is to rename the company to CSA and retain 2,500 employees. Smartwings shareholders should provide about two-thirds of the amount needed to save the company.
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Help for all transport companies?
“It is inconceivable for me that we would provide state guarantees to individual companies,” the minister said. She added that she had enforced the law on state guarantees in the Chamber of Deputies, which defines aid to companies affected by coronavirus.
Havlíček said on Friday that the ministry was preparing a program that would enable assistance to all transport companies. “We are preparing measures that will not disadvantage transport companies from the normal support framework,” he said. If it is to invest in a strategic company, then, according to Schiller, there should be a definition of such a company. This should be the responsibility of the Ministry of Industry and Trade.
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