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A reduced value-added tax (VAT) on the key food products cannot ensure lower prices for buyers, Lithuania's Prime Minister Saulius Skvernelis told the national radio LRT on Tuesday.
Groceries
Groceries
© DELFI / Tomas Vinickas

"I would support all proposals, they are worth do be discussed, if the end beneficiary is the consumer. Today we cannot be sure that a reduced tax will have a direct impact on the consumer rather than stay with the seller," the prime minister said.

In his words, appetites of retailers who do not cut prices in parallel to lower VAT tariffs can only be curbed by growing competition.

"If we are talking about market economy, there is only one way to curb them – this is competition, which best solves this type of issues. Arrival of new players on the market makes consumers feel and see price changes," said Skvernelis.

The head of the government said raising the population's income was a better solution, so that they could earn more and could afford the products.

"In order for the salaries to be higher, we must facilitate business development and modernization, as well as creation of new jobs," the prime minister told the radio.

Currently, reduced VAT tariffs stand at 5 percent and 9 percent, however, should change to 5 percent and 15 percent starting 2018.

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