Thesis: Share of Household Budget Spent on Food Decreased Among Poor

Photo: Postimees/Scanpix
7/5/2013 4:47 PM
Category: Society

A fresh master's thesis compares spending on food from 2004 to 2012, concluding that poorer people are spending a smaller proportion of their budget on food. The opposite trend was found among wealthier people.

The study's author, Diana Objedkina, found that in 2004, families earning one minimum wage or less per family member spent 37 percent of their income on food, while families where income was more than three minimum salaries per member spent 10 percent.

The corresponding figures for 2012 where 30 and 17 percent, although in absolute terms, spending has gone up in both groups.

The Tallinn University student reasoned that richer families purchased fewer luxury items after the recession set in, while less well-off families now spend proportionally more on other commodities, like water and electricity.

Objedkina's thesis analyzed the rationality of a lower VAT on food. Finance Minister Jürgen Ligi told Äripäev today that Estonia's 20 percent VAT on food, on par with other products, should not be lowered because it would benefit the rich more, as they buy more, and the lost income from lower VAT would have to be balanced out by higher income and social taxes.


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