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Sweden Plans to Halve VAT on Food to Stimulate Economy
The VAT reduction aims to lower food costs by up to 5.4%, benefiting low-income families most, with a commission ensuring retailers pass savings to consumers.
- On 4 September 2025, Sweden announced it will cut the VAT on food from 12% to 6%, starting 1 April 2026.
- This temporary VAT reduction aims to ease rising food costs driven by inflation, low competition, and environmental challenges until 31 December 2027.
- Ebba Busch, Sweden’s Deputy Prime Minister, emphasized that the reform will significantly benefit the most financially strained households and urged local competition authorities to encourage the establishment of additional grocery stores.
- Busch estimated the cut could reduce feeding costs for a two-child family by 6,500 kronor annually, while strategist Olle Holmgren expected 80–90% of the cut to reach consumers.
- The government plans a Food Price Commission and price monitoring to ensure retailers pass on savings, indicating efforts to support households and stimulate spending.
18 Articles
18 Articles
The Swedish government wants to halve VAT on food.
The government announced today as part of the 2026 budget that it wants to lower food VAT from 12 to 6 percent starting in April next year. The reduction will then apply until the end of 2027. “A very welcome proposal,” says retailer Johannes Lindström in Sundsvall, who at the same time admits that there is a risk of sneaky increases in food prices.
The Scandinavian country faced a sharp rise in food prices in the spring, as a result of inflation, the war in Ukraine and the coronavirus pandemic.
The Tidö parties are halving the food VAT. This is met with sharp criticism from the Liberal Youth Union, Luf, and from a collective body of researchers. – It is a really bad idea. You will not find any tax economist who thinks this is good, says tax expert Åsa Hansson to TT.
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