The case of bread: is it appropriate or not to lower VAT on basic basket products?

Regarding the tax pressure that affects the final prices of the basic basket, the economist Guido Zackco-author of the document “Towards a harmonious federal tax system – Diagnosis and proposals” presented some time ago by the Center for Research and Design of Public Policies Foundunderlined these points when asked by this newspaper.

• The important thing is to see how accessible the basic basket is to the population. And make the basic basket more accessible to the population There are two strategies: .reduce the price of the basic basket or increase the income of the population, in particular those who have difficulty accessing the products of the basic basket.

• We are more aligned with this second possibility than with the first, because all tax extensions create a lot of room for evasion. A very simple example. What happens when VAT is removed from products in the basic basket, for example bread.

• A discussion then arises: should VAT be removed only on the final product, bread, or on the entire supply chain? Because if you only consider the last link in the chain, it is clearly much less than 21% of the total product price.

• But beyond that, if you decide to deduct VAT for the entire supply chain, continuing with the baker’s example, the baker will clearly have an incentive to say that all the flour he bought was to make bread, to avoid paying VATwhen a large part of the flour purchased is likely to be used for production half moons. So tax cuts continually generate these types of holes that make it very difficult to collect taxes correctly.

• Keep in mind that if we can collect VAT well and avoid VAT evasion and avoidance, then it will be much easier to collect taxes on profits and income, which are also already more progressive taxes.

• AS VAT is a tax on information systems. If we start to get our hands on VAT to demand progressivity objectives for the tax system, we will affect the entire tax system.

• For the tax system to be progressive, which is obviously one of the goals of the tax system, does not imply that all taxes must be progressive. VAT is not a progressive tax, but is a tax that orders and allows progressive taxes to be collected on income and movable property.