Most of Denmark's planned food VAT cut will go directly to consumers

Shoppers in Denmark may soon see lower food prices. Tax Minister Jakob Engel-Schmidt says most of a planned tax cut will reach consumers.

Denmark now adds a 25 percent tax to all goods. The government wants to lower this tax on food. One plan cuts the food tax to 12.5 percent. That plan costs 14.7 billion Danish kroner. Another plan drops the tax on fruit and vegetables to zero. That costs 2.6 billion Danish kroner. Doing both costs 17.4 billion Danish kroner.

Engel-Schmidt spoke to broadcaster DR about the policy. He expects people to see 96 percent of the tax cut in store prices. The other four percent will cover business costs to run the new system. Denmark has not used different tax rates before. Stores must now build new systems to calculate the tax.

The tax ministry is working on a report about these costs. Final details will come out in a few months, reports The Local.