ECONOMY

Georgiadis: Tax cut ‘wouldn’t necessarily lead to price drop’

Georgiadis: Tax cut ‘wouldn’t necessarily lead to price drop’

Reducing the rates of value-added tax or the special consumption tax on fuel will not necessarily lead to lower prices for consumers, Development and Investments Minister Adonis Georgiadis asserted, speaking to state radio, on Thursday: “If you lower VAT, it does not mean the prices of products are automatically lowered, or that when you reduce the Special Consumption Tax on fuel, there is an automatic reduction of fuel prices. That has never been the case until now,” he said.

On the contrary, he added, “if we have a reduction of VAT on a series of products, it is certain that the reduction will not be passed on to the final prices.”

He pointed out that past reductions of VAT on the restaurant/hospitality sector did not have an equivalent impact on prices, just as VAT increases had not increased them by the same amount: “Businesses tend to either absorb a part of the loss to avoid losing their customers or, at easier times, try to make good their losses.”