Alexander Slusar
In a comment to Logos Press, the organization’s director, Alexander Slusar, clarified that following the protests, during internal meetings (parliamentary committees and factions) and in the media, certain officials had expressed the view that “the government is taking a break from the VAT issue.” However, it remains unclear exactly which process has been “put on hold” and for how long.
“The Minister of Finance stated during parliamentary discussions that, as a measure to mitigate the impact of the introduction of the standard VAT rate on farmers, the option of so-called ‘reverse taxation’ is being considered, which implies an effective ‘zero VAT’ on agricultural products,” notes Alexander Slusar. “However, a logical question arises: why is the declared simplification of the VAT system—through the introduction of a single, uniform 20percent rate be disguised by highly complex tax relief schemes for certain categories of taxpayers (in particular, agricultural producers) and for certain (socially significant) products?”
Desirable Response
From the perspective of the leadership of “Forța Fermierilor,” the most understandable (and desirable for agricultural producers) official government position would be as follows:
- rejecting the 2027 budget and tax policy draft by the end of July and postponing the process until the fall;
- refraining from raising the VAT rate on agricultural products to 20%;
- development and public discussion of alternative options for VAT reform, in particular the introduction of a reduced flat VAT rate across the entire agri-food chain – following the example of the European Union’s practice in this area.
Clearly, if the situation unfolds according to this scenario, it will take more time to implement tax reform. Accordingly, as the leadership of “Forța Fermierilor” notes, “during the ‘transition period,’ virtually all associations in the agri-food sector support maintaining the current 8 percent VAT rate on agricultural products.”
By and large, such a scenario implies the development of a new concept for VAT reform—and, consequently, an acknowledgment that the previous draft was unworkable. In such a situation, it would be logical for the new leadership of the relevant ministry to propose this new concept. But are the party and government leadership ready to make such a decision?
And here’s another question: If this scenario doesn’t go through, are farmers prepared to resume protests during the “peak period” of the harvest season and the hot summer in general?
