– We propose to remove the food VAT temporarily, says confederation leader Christopher Beckham in Trade and Office in Norway. On 1 February, another price jump of up to 10 per cent is expected, according to news’s information. The increase comes on top of a sharp increase in the price of food last year. – We see that poverty has increased. There have been long queues at the poorhouses to get food, and we see that people have lower purchasing power due to the fact that all prices have increased considerably. That is the reason why Beckham is now asking the government to temporarily remove food VAT, which is currently 15 per cent. – These are measures to ensure that people can simply put food on the table, he says. Confederation leader Christopher Beckham of the LO confederation Trade and office asks the government to remove the food VAT temporarily to ensure that everyone can afford food. Photo: Ilja C. Hendel / © Ilja C. Hendel – Why do you think this is a surefire measure? – It is surefire because you will look at the receipt every time you shop to see that you have saved 15 per cent food VAT. The move comes a few days after another LO leader, Fellesforbundet leader Jørn Eggum, asked the government to increase the electricity subsidy for households or introduce a maximum price of 70 øre per kilowatt hour for electricity. Eggum is worried that expensive electricity, food and petrol will make it difficult to come to terms with the spring salary settlement. – Little targeted But professor of social economy Ragnar Torvik at NTNU believes that removing food VAT, as HK Norway is now advocating, is the wrong medicine. – The increased food prices are a challenge. But reducing food VAT to do something about that challenge, I believe is a poorly targeted and therefore a bad measure, he says. The reason is that this measure will not primarily help those who need it most, Torvik believes. He illustrates his point with a calculation: – Those who earn 10 percent the most spend four times as much on food as those who earn 10 percent the least. – If you think that you should transfer to low-income families, families with children or students with lower food VAT, then you actually give four times as much to those with a high income. Professor of social economics Ragnar Torvik at NTNU believes that removing the food VAT is not very effective in hitting those with low incomes. Photo: Alf Simensen / NTB Torvik led the Tax Committee, which recently presented its report. The committee was set up by the Solberg government to carry out a comprehensive review of the tax system. The committee advocated raising all VAT to 25 per cent. – A much better way to do such measures is to target them at what you want to achieve. For example, reducing tax on lower incomes, increasing child benefit and increasing student aid, says Torvik. – We in the tax committee go into those things here and propose it as a better way of handling income distribution than reducing food VAT. 15–16 billion But despite warnings from Torvik, union leader Beckham believes that it is wise to remove food VAT. – If there are two families who are fed now because the food VAT disappears, then it is right that the two families are fed. I can’t help that 100 rich families can then afford to buy even more, he says. – But why should the state adopt such expensive measures instead of increasing child benefit, housing allowance and student allowance which directly help those with the lowest income? – It is clear that the government can come up with lots of measures to increase people’s purchasing power. This is one proposal that is concrete, says Beckham. But such a move would be costly for the state. HK Norway estimates that it will cost around NOK 15-16 billion to remove food VAT for one year. – Where do you think the government will find NOK 15 billion to cover this? – Keeping trade going will mean keeping people in work. Keeping trade down will mean that we will have unemployed people, and then Nav’s budgets will have to be used to get people back to work. So it is a “win-win” to temporarily remove food VAT, Beckham believes. The Progress Party has also called for food VAT to be halved for the whole of 2023. At the same time, the party wants fuel taxes to be halved for half the year and a maximum price of 50 øre per kilowatt hour for electricity. – Fuel on the fire But the Center Party’s finance chief in the Storting, Geir Pollestad, has no faith that the problem of high price growth can be solved by spending more money. – I can understand the intention of the proposal. But it is another proposal that will both be very expensive and have major negative consequences, plus we fear how large a proportion of this will end up with the three chains and not with the consumers, he says to news. – But isn’t there a point in helping people when food prices once again skyrocket? – Yes, and one of the things we are most aware of is that the rise in prices affects those who struggle the most and have the worst finances. That is why we have to hold back on spending. FINANCIAL COMRADES: Neither Trygve Slagsvold Vedum nor Geir Pollestad, both from the Center Party, believe the solution to the price crisis is to spend more money. Photo: Terje Pedersen / NTB The Sp-toppen therefore warns against “spending money”: – Then there will be a strong backlash. It will be like pouring petrol on the fire, says Pollestad, and continues: – All proposals to spend more money, whether it is on reduced food VAT or electricity subsidies, are alluring. But we believe in sum that they will work against their purpose. This may in the short term result in reduced prices, but it will help push interest rates up and create upward price pressure on goods. – The solution is to use unpopular measures and say “no”, says Pollestad.
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LO summit asks Vedum to cut food VAT – news Norway – Overview of news from various parts of the country
