Latvia's decision to reduce value-added tax (VAT) on selected food products has led to lower prices and increased sales, Rimi Latvija CEO Valdis Turlais told a conference organized by the Estonian Traders Association, Postimees writes.

Since July 1, Latvia has applied a reduced VAT rate of 12 percent to bread and baked goods, milk, eggs and fresh chicken as part of a pilot project running until June 30, 2027. While the tax cut was theoretically expected to reduce retail prices by 7.44 percent, Latvia's Competition Council found that prices across the four categories had fallen by an average of 8.32 percent by September. Turlais said Rimi's sales volumes in the affected categories were 12 to 20 percent higher in October than a year earlier, with some suppliers struggling to meet increased demand.

However, Reform Party politician Aivar Sõerd opposed a similar measure in Estonia, citing an International Monetary Fund assessment that described reducing food VAT as fundamentally misguided. Sõerd argued that cutting VAT on basic food products to 13 percent would cost the state €100 million to €120 million annually, while wealthier households would benefit more in absolute terms.

Parempoolsed leader Lavly Perling also opposed a separate reduced VAT rate for food, instead advocating a general VAT reduction that would benefit consumers across all purchases.

Meanwhile, Isamaa leader Urmas Reinsalu pledged to reduce VAT on basic food products by July 1, 2027, if his party wins a mandate in the next election. Representatives of three other parties — EKRE's Siim Pohlak, Social Democratic Party leader Lauri Läänemets and Center Party chairman Mihhail Kõlvart — have also supported lowering VAT on food, the newspaper reports.

Estonia sports a near-universal 24 percent VAT rate, with accommodation (13 percent) and books and medicines (9 percent) the only current exceptions.

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