Text file: 4850.txt
author: peter i
downvotes: 2
end consideration date: 2013-08-27
id: '4850'
number comments: 11
number views: 2819
proposal type: Competent authority response
response: "Response from the Ministry of Economic Development and Technology\nIt is\
  \ necessary to take into account the fact that prices are freely determined in a\
  \ market economy and that fixing the level of the margin would imply regulation\
  \ of sales prices by the State, which is only permissible in exceptional cases in\
  \ accordance with the Price Control Act. Therefore, for the reasons set out below,\
  \ we consider that the proposal is not suitable for further consideration.\nThe\
  \ determination of margins or the difference between the purchase and the selling\
  \ price is based on cost and market factors and the business objectives of the traders.\
  \ The margin reflects the business strategy of the trading company, price and therefore\
  \ margin is one of the basic market mechanisms for market operators to adapt to\
  \ demand and competition on the market, i.e. it is one of the tools for market competition\
  \ and for establishing competitive advantages. It would also be difficult to equate\
  \ traders' margins, given that they have different costs on the market which they\
  \ cover with their margin (material costs, labour costs, depreciation, transport,\
  \ etc.), as well as different market positions (e.g. multinationals, small traders).\n\
  At the same time, administrative margin-setting would be a breach of competition\
  \ rules and would generally lead to higher prices for the final consumer than would\
  \ be provided by a market mechanism.\n \nResponse from the Ministry of Finance\n\
  With regard to the change in the VAT rates as implemented on 1 July 2013 (i.e. The\
  \ increase in the general VAT rate to 22% and the reduced rate to 9.5%) was taken\
  \ as one of the measures to urgently balance the public finances, and it was assessed\
  \ that this measure would not have a significant negative impact on the competitiveness\
  \ of the Slovenian economy, nor was a significant increase in the retail prices\
  \ of goods and services expected as a result of this change, in particular for those\
  \ categories of goods and services which are taxed at a lower VAT rate under the\
  \ Value Added Tax Act, as the tax rate was increased by only 1 percentage point.\n\
  From the point of view of the functioning of the VAT system, it should be borne\
  \ in mind that VAT is not an appropriate instrument for regulating the prices of\
  \ goods and services offered by economic operators on the market, as these are primarily\
  \ determined by supply and demand, as well as other competitive conditions. Therefore,\
  \ a reduction in VAT for certain categories of goods or services does not necessarily\
  \ imply a reduction in prices from the above.\nTherefore, in accordance with the\
  \ VAT system and the obligation to pay VAT as regulated in Slovenia by the Value\
  \ Added Tax Act (Official Gazette of the Republic of Slovenia, No. 13/11-UPB, 18/11,\
  \ 78/11, 38/12, 83/12 and 46/13-ZIPRS1314-A), VAT in respect of taxable supplies\
  \ of goods and services is levied at the standard rate of 22% and at the lower rate\
  \ of 9.5% applicable to supplies listed in Annex I to that Act. The lower VAT rate\
  \ is applied to categories of goods which are primarily intended to meet the basic\
  \ needs of life of end-users (all food and non-alcoholic beverages, water supplies,\
  \ medicines, medical devices, the supply and renovation of social housing), to certain\
  \ other \"publicly essential\" goods and to certain labour-intensive services (minor\
  \ repairs of bicycles, shoes and leather goods, clothing and household linen, renovation\
  \ and repairs of private ones). Slovenia did not introduce the possibility of applying\
  \ an additional (second or special) reduced VAT rate when the VAT system for goods\
  \ and services was introduced in Slovenia in 1999, nor in the subsequent revisions\
  \ of the VAT system, as implemented by the amendments to the Value Added Tax Act,\
  \ including ZDDV-1, as amended, although this possibility is provided for in Council\
  \ Directive 2006/112/EC on the common system of value added tax in the European\
  \ Union (VAT Directive 2006/112/EC), which provides for the application of an additional\
  \ (second or special) reduced VAT rate.\nThe introduction of an additional reduced\
  \ VAT rate (only) for individual foodstuffs would constitute a derogation from the\
  \ established VAT system in Slovenia, according to which all products and agricultural\
  \ produce used as food for human consumption (including soft drinks) are taxed at\
  \ a uniform VAT rate of 9.5%. At the same time, such a change would also lead to\
  \ a certain increase in the administrative burden for economic operators, suppliers\
  \ of different types of foodstuffs (taxable persons), related to the additional\
  \ differentiation of foodstuffs taxed at each VAT rate. Last but not least, the\
  \ introduction of such an arrangement would also lead to a certain reduction in\
  \ public revenue.\nIn view of all the above, the initiative to introduce an additional\
  \ lower VAT rate of 5% on basic foodstuffs cannot be supported in the current circumstances.\n\
  \ "
response date: 2013-10-01
response due date: null
sent date: 2013-07-29
title: Lower tax and margins on basic foodstuffs
upvotes: 13
url: https://predlagam.vladi.si/predlog/4850
