SAMO: Windfall Tax on Retail Chains Would Drive Up Consumer Prices

SAMO: Windfall Tax on Retail Chains Would Drive Up Consumer Prices
Stock photo by TASR

Bratislava, August 4 (TASR) - A proposal to introduce a windfall tax on retail chains is an exercise in populism, which, if implemented, would translate into a hike of food prices and might also undermine the employment, wages, and investments in the development of supplier businesses in regions, TASR was told by the Slovak Modern Retail Alliance (SAMO) chair Martin Krajcovic on Friday.

Krajcovic spoke in response to Thursday's (August 3) statements by Voice-SD member Branislav Becik, who had proposed the introduction of the windfall tax for retail chains.

"A previous attempt to tax retail chains was seen already during the government of Peter Pellegrini (Voice-SD, 2018-20), when the Finance Ministry established that this food tax increased the prices of foods and because of this measure the Slovak consumers paid €50 million more in food prices in January 2019 alone in a year-on-year comparison," said Krajcovic.

He added that the price regulation has been embraced also by Hungary, for instance, and it resulted in Hungary seeing the highest inflation within the EU.

A developed Europe takes the path of compensations not regulation. According to Krajcovic, retail chains see average profit of 4 percent, which is less than profits in other sectors of the economy.

Since the onset of the crisis, procuring prices for retail goods have gone up more steeply on average than sale prices have gone for consumers, evidence in Krajcovic's view that the retails have been cushioning the inflation in Slovakia.

"If the windfall tax were introduced, it might jeopardise also Slovak food producers, as the Slovak foods are more expensive on average than foreign equivalents. Windfall tax compensation might then be shifted also onto the producer, who would be forced to sell the products at a lower price or be pushed off shelves by foreign competition," said Krajcovic.

He added that instead of engaging in populism, political parties should seek ways to support domestic production.