The government reduces the value-added tax on essentials and compensates for costs with plastic fees.
Austrian consumers will see a slight decrease in the prices of essential food items as the government announces a reduction in VAT from 10% to 5% starting from the second half of the year. Butter, milk, and eggs will become cheaper at checkout in supermarkets.
This measure, supported by Andy Babler and the SPÖ party, has sparked celebrations on social media, where supporters praised the party's role in the government. The reduction in VAT is expected to cost the Ministry of Finance around 400 million euros.
As for daily groceries, the savings are small but noticeable. A quarter kilo of butter will go from €1.29 to €1.23, a saving of 6 cents. A liter of milk will drop from €1.39 to €1.32, saving 7 cents, while a dozen organic eggs will be 17 cents cheaper, about 1.7 cents per egg. Half a kilo of black bread will see a reduction of 10 cents.
Other essential food items include pasta and potatoes, with the final list to be determined in coordination with retailers in the coming weeks. To compensate for the shortfall of 400 million euros, the government plans to impose new fees on non-recyclable plastics and packages coming from third countries. The relevant authorities will ensure that retailers pass on the savings from the VAT reduction to customers.
Chancellor Christian Stöcker confirmed that the reduction of value-added tax will provide limited relief for families, but he clarified that broader efforts will target reducing inflation, especially energy prices. The measures include the 'Austrian tariff' and cheaper electricity prices for industrial companies, aiming to reduce the inflation rate to around 2% by 2026.