Prices Should Not Increase with Higher Value Added Tax
Published: Monday, Oct 16th 2023, 13:00
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In Switzerland, a higher value-added tax rate will come into effect in 2024. Most retailers are not expected to increase prices for their goods as a result. The normal rate will increase from 7.7% to 8.1%, and the reduced rate for food will increase from 2.5% to 2.6%. Retailer Aldi Switzerland has announced that it will not pass on the increase in value-added tax to its customers, particularly for food items where the tax increase is only 0.1%. Bernhard Egger, the CEO of the Swiss Retail Federation, believes that many retailers will not pass on the additional costs to their customers, as it is more psychologically beneficial to keep prices at a certain level, such as 9.90 CHF instead of 10.00 CHF. Companies such as Migros, Denner, Migrolino, Lidl, and Manor have all stated that they will not pass on the additional costs to their customers. Other retailers such as Volg, MediaMarkt, and Coop have yet to make a decision. Although retailers may not pass on the additional costs of the value-added tax, prices are still expected to increase due to inflation. In September 2023, 1 kilogram of potatoes cost 3.02 CHF, which was 5.3% more than the previous year.
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