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France: Could a zero per cent VAT on organic products be the solution?

Michel-Edouard Leclerc, head of the supermarket chain, recently declared: “I propose 0% VAT on organic products, which are inevitably more expensive. They should not be reserved just for the rich.”

This launched a huge debate on the internet. The Ministry of Finance states that 0% VAT is not possible because of the common rules of the European Union. On the other hand, a reduced VAT on organic products is one of the avenues being studied, following the Great National Debate. As for the farmers, the answer is straightforward. “Lowering the VAT is a way of telling the consumer that organic products can be cheaper than conventional ones. But this is false,” insists Patrick Benezit, deputy secretary-general of the National Federation of the Farmers’ Unions (FNSEA). “Organic products are fashionable so retailers are trying to use them to appeal to the consumers.”

Some, like the supermarket, Systeme U, claim that this will not change much for the consumers. The difference would only be of a few cents. “No VAT reduction has ever revealed a major positive impact. The catering example, going down to 10%, and that of the feminine protection products are in a different category,” explains Dominique Schelcher, president of Système U. As for the organic retailers, Claude Gruffat, president of Biocoop, has been defending for years the idea of “reducing the price gap unfairly imposed on organic products.” According to him, a reduced VAT should not only apply to products “made in France”. “We should also take a look at our neighbors, while keeping an eye on the carbon footprint. A VAT reduction would hardly be noticeable on food products, but for the merchandise taxed at 20 or 10%, such as household products, there would be a real effect on the prices.”


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