Do Small Value-Added Tax Rate Decreases on Groceries Imply Lower Prices for Consumers?

Arkadiusz Bernal


In the vast majority of countries where a value-added tax (VAT) is in force, basic groceries are taxed at reduced rates. The reduced tax rates are intended to ensure the lowest possible prices for those products for consumers, but this does not always happen. The objective of this article is to determine whether the small reduction in the VAT rate on groceries, from 7% to 5%, which took place in January 2011 in Poland, resulted in lower prices for consumers, and the research does not support the conclusion that the government’s reduction of the VAT on basic foodstuffs had that effect. Behavioral economics and psychology can explain the absence of price reductions. The conclusions drawn have important implications for tax policy.
Author Arkadiusz Bernal (WZ / KFP)
Arkadiusz Bernal,,
- Department of Corporate Finance
Journal seriesEastern European Economics, ISSN 0012-8775, (A 15 pkt)
Issue year2018
Publication size in sheets0.85
Keywords in Englishbehavioral economics, consumption, tax incidence, value-added tax
ASJC Classification2002 Economics and Econometrics
Languageen angielski
Score (nominal)15
Score sourcejournalList
ScoreMinisterial score = 15.0, 08-04-2020, ArticleFromJournal
Publication indicators WoS Citations = 1; Scopus SNIP (Source Normalised Impact per Paper): 2018 = 0.986; WoS Impact Factor: 2017 = 0.62 (2) - 2017=0.754 (5)
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UwagiFirst online: 21 Dec 2017
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* presented citation count is obtained through Internet information analysis and it is close to the number calculated by the Publish or Perish system.
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