Representatives of the dairy and fat-and-oil unions of Russia believe that an increase in VAT on products with a milk fat substitute, if such a decision is made, can lead to higher prices and a reduction in demand both in retail and wholesale. In addition, this decision will deprive consumers of low-cost products and reduce the demand for raw milk, manufacturers warn.
The Ministry of Agriculture recently proposed to deprive the benefits of part of the products. In particular, almost twice - from 10 to at least 18% - can grow VAT on products with milk fat substitutes. This issue was discussed at the Agriculture Ministry on June 29, RBC reports. The agency TASS confirmed this information in the press service of the Ministry of Agriculture.
As follows from the documents following the meeting, opinions on whether it is expedient to raise VAT on products with milk fat substitutes of 18-20%, should be sent to the Ministry of Agriculture of the Russian Federation until July 13.
The increase in VAT is seen as a measure to reduce the market share of products with a substitute for milk fat and, as a consequence, to increase the consumption of natural milk.
"For several seasons the volume of production and consumption of milk-containing products shows a positive trend, which is strengthened in the market mainly because of the price availability of the product." The increase in the price for this category of milk products will not become more affordable, "said Mikhail Maltsev, Executive Director of the Russian Fat-and-Oil Union .
An increase in VAT on any foodstuffs will lead to a general reduction in demand, as consumption has only begun to recover after years of decline and shows "a subtle positive dynamics," said Andrei Danilenko, chairman of the board of the National Union of Milk Producers (Soyuzmoloko).
In addition, this measure can have a negative impact directly on the producers, he says. "Milk production is also required for the production of milk products, and the growth of VAT on this category can indirectly affect the demand for our raw materials," the expert said. In other words, it will not be possible to solve the problem of price settlement in this way, Maltsev agrees.
"It is possible to really influence the cost of dairy products only by controlling and regulating the import volumes of milk powder, rather than crushing adjacent industries," he said.
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