What price Luxembourg's VAT hike
Luxembourg's VAT hike at the beginning of 2015 has had a minimal impact so far on consumer prices in the Grand Duchy, the country's Secretary of State for Economy has concluded.
Presenting a study by consumer price analysts the “Observatoire de la formation des prix”, Francine Closener said that since the VAT increase, prices increased on average by 0.43 percent.
“According to the study, a quarter of products subjected to the standard VAT rates saw prices fall between the end of 2014 and the beginning of 2015,” she said, adding: “Around a third of these products have not changed in price, despite the VAT rise.”
She concluded that less than half of products which were subject to VAT rates increases, saw their prices go up.”
The report compared the prices of six different brands sold in Luxembourg, in November 2014 and February 2015.
The resulting average increase was lower than the estimated price rise. Had the full VAT rise been passed on to consumers, prices should have increased by on average 0.62 percent, the Observatoire report revealed.
It also stressed that price increases where found were not necessarily a result of the VAT increase. They could also be affected by the cost of raw materials, labour and supply and demand.
It should be noted that of all products included in the report, two thirds were subject to the super-reduced rate of 3 percent, which remained unchanged on January 1, 2015.
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