The Swedish government plans to halve the food VAT from 12% to 6% starting April 1, aiming to enhance household purchasing power until December 2027. This temporary measure is expected to save families and pensioners thousands annually. Major retailers like Coop and Ica have pledged to lower prices accordingly. A new food price commission will monitor the impact to ensure savings reach consumers.
Swedish Government Proposes Halving Food VAT to Boost Household Purchasing Power
Government Proposes Halving Food VAT
The food VAT will be halved starting April 1, as proposed by the government. This is a temporary reduction until December 31, 2027.
– Food is too expensive for many families, says Minister of Enterprise Ebba Busch (KD). Coop and Ica promise to lower prices.
The food VAT will be reduced from 12% to 6%, the government announces. The aim is to strengthen household purchasing power. The change is temporary and applies from April 1 to the end of December 2027.
– We will reduce the food VAT to ease the burden on Swedish families, says Prime Minister Ulf Kristersson (M) at the press conference.
The government will also establish a food price commission to ensure that the halved food VAT actually leads to lower prices in stores.
Government: Saves Thousands
Food will become 6,500 SEK cheaper per year for a family with two adults and two children if the reduction is fully implemented, according to the government.
Two pensioners will save 4,400 SEK per year.
– We want to make it cheaper to be Swedish, says Ebba Busch, adding:
– Those who earn the least and therefore spend the most on their food will benefit the most from this in percentage terms.
Establishing a Commission
To ensure that the reduced VAT is reflected on the shelves, the government is establishing a food price commission. It will be developed by the Consumer Agency, the National Institute of Economic Research, and the Swedish Competition Authority.
The commission is tasked with monitoring market price developments and ensuring that the reduced costs reach consumers.
– When we lower the VAT, we expect it to be noticeable on the shelves in grocery stores. Retail giants must not let the VAT reduction get stuck in their own pockets, says Ebba Busch.
The commission will not be able to do more than monitor pricing.
– We have free pricing in a free country, which is why we are appointing this commission to ensure the reduction takes effect. Those who do not want to lower prices when we create the conditions for lower prices will be noticed in a way that will be noted, says Ulf Kristersson.
Giants' Promise: We Will Lower Prices
Two major food retailers have promised to lower food prices as a result of the proposal.
– Coop will lower prices corresponding to the VAT reduction, says Anders Torell, CEO of Coop Sweden to TT.
– We will of course work to ensure that this is fully reflected in the stores, says Ica Sweden's CEO Eric Lundberg, to TT.
C and S Positive
C also wants to lower the food VAT.
– People's grocery bags are worth investing in. In our budget motion, we will halve the VAT on food and non-alcoholic beverages from 12% to 6%, says party leader Anna-Karin Hatt at a press conference earlier on Thursday.
But it is not enough, according to the party – which also wants to introduce an agricultural deduction, invest more in the preparedness of Swedish farms, focus more on agriculture in northern Sweden, and build emergency grain storage.
Mikael Damberg, S economic policy spokesperson, says that his party has demanded measures to push down food prices for two years:
"We have demanded reduced food VAT. For over two years, we have demanded that the government introduce a food price commission to push prices down. Good that the government is finally taking our proposal," he says in a comment to Expressen.