INESS: The new levy on retailers costs households €50 million

People are expected to pay more for food in March.

(Source: Sme)

While the Finance Ministry claims that the brand new levy on retail chains only had a minimal impact on the increase in prices, analysts from the Institute of Economic and Social Sciences (INESS) think tank do not share this opinion. They point to the actual sums, not only the percentage.

"The impact of the new levy on retail chains was minimal on the price increase," the Finance Ministry reacted to the latest figures by the Statistical Office of the Slovak Republic (ŠU SR).

Read also:Q&A: How will the new levy on retailers affect people? Read more 

The annual inflation rate amounted to 2.2 percent in total in the first month of 2019. Slovakia's consumer prices increased by 1.1 percent in January 2019, with the prices of food and non-alcoholic beverages growing by 3 percent.

"The levy on retail chains contributed to inflation only by roughly 0.1 percent," claimed the ministry.

The actual increase: €50 million

Although the figures are correct, the INESS does not see "only" and "minimal" to be the right terms to describe the levy's impact on people's budgets.

"The increase by 0.1 percent means that the levy on retailers affected the growth of January prices by nearly one-twentieth," INESS wrote in its press release.

This figure may seem small. But if the total consumption of households was roughly €50 billion, the total increase in food prices due to the levy was in fact €50 million. It is not clear yet what impact the levy could have on other products.

"It is obvious from the figures that the levy on retailers has significantly impacted food prices and we can expect another price growth in March," INESS claimed in the press release.

Three biggest retailers have not paid

Read also:Parliament approves special levy for retail chains Read more 

The Finance Ministry estimates that €107 million could flow into the state coffers in 2019 thanks to the levy.

To achieve the estimate, the three biggest retailers, whose share on the revenues of all retail chains represents 62 percent, will have to pay the levy. This is expected to happen in March.

The money acquired thanks to the levy should be placed in the Marketing Fund, which has not been set up to date, the INESS added.

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Theme: Economics


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