Market and grocery store owners irked by government’s reduction of VAT

The government's move to lower the value-added tax (VAT) on basic food products has infuriated market and grocery stores owners who say that they will incur a financial loss. “Until today, we have already bought all our goods by paying the 8 percent VAT. Now the state is telling us that we have to reduce this VAT to 1 percent. But who will cover my difference and losses?” said one.

Tuesday February 15 2022 10:50 am

Ferhat Yaşar / DUVAR

As inflation has reached a near 20-year high, President Recep Tayyip Erdoğan announced that the government would reduce the value-added tax on basic food products from 8 percent to 1 percent.

This policy applies to staples including flour, rice, pasta, meat, fish, tea, coffee, water, milk and dairy products, cheese, eggs, oils, sugar, fruits, vegetables, nuts, and legumes.

Ahead of his trip to the United Arab Emirates, President Erdoğan warned that “those who do not enforce this policy will pay a heavy price.” As of Feb. 14, teams dispatched by the municipal police and the License Inspection Directorate have been carrying out VAT inspections in Turkey’s markets.

While the authorities announced that this reduction in the VAT would immediately be reflected in price levels, market owners and grocers reacted by saying that the prices could only be lowered within three months.

“Until today, we have already bought all our goods by paying the 8 percent VAT. Now the state is telling us that we have to reduce this VAT to 1 percent. But who will cover my difference and losses? Are we the slaves of the state?” said one.

“We have reduced the price. However, we do not pay the 8 percent VAT difference on the goods we sold before. This is unfair on the markets,” bemoaned the representative of a sausage company, who came to a market to sell goods. “Markets are required to sell their goods at the price they purchased them in advance. We can only apply the new prices after the goods have been sold. Otherwise, who will pay for our losses?”

Another market owner, who also reacted to the government’s decision, made the following assessment regarding the new prices: “I bought 500,000 liras worth of goods with the 8 percent VAT and have many in stock. They tell me that I will incur a loss of 35,000 liras. This is unacceptable,” he deplored. “Give us our difference and then we’ll lower the prices!”

“The state cannot live on our backs. We have already paid an 8 percent tax for the goods we sell. The state has to pay the difference. Only then can the policy be enforced,” said yet another market owner.

“I will only lower the prices for the goods I bought with an 1 percent VAT. Let them punish us. The state has turned us into scapegoats and is turning people against each other.”

Turkey on Feb. 3 reported an annual inflation rate of 48.69 percent in January, the highest in two decades, whereas the independent inflation group ENAG put the figure at 114.87 percent.

Inflation has been particularly acutely felt in housing prices, food, and utilities.