Palandoken noted that the Value-added tax (VAT) rate on food products should be reduced to 1 percent.
Expressing that the hikes in food prices put the tradesmen as well as the consumers, Palandöken said, "Our shopkeepers have to reflect the increase in food prices on their sales prices. As the prices increase, both the profit and the sales of the tradesmen decrease. The rate of value added tax should be reduced to 1 percent, especially in order to partially decrease the prices of basic food products."
CURRENT IMPLEMENTATION INCREASES INFORMALITY
Pointing out that the application of different tax rates to the same goods and services in VAT application both increases informality and makes it difficult to apply, "We pay 1 percent VAT when we buy chickpeas in wholesale and 8 percent when we sell them retail. If we process and sell the same chickpeas, the VAT rate rises to 18 percent. Having more than one VAT rate on the same good both complicates the application and increases informality. For this reason, if the VAT rate is 1 percent for all food products, regardless of whether they are wholesale or retail, both informality will decrease and tax revenues will increase," he added.