NOTE: The first version of this post contained a factual error. I’ve corrected it. The Hungarians and Poles did, in fact, successfully negotiate a transition period for their VAT laws.
One of the big items in the Czech papers yesterday was the fact that most restaurants and bars will raise the price of food on May 1, the day of Czech EU accession, as food gets slotted into the higher 22% value-added-tax category as per Brussels’ demand. On Tuesday, the EU rejected a French proposal to keep food in the 5% category.
I am not among those that think harmonized tax regimes are part of an evil socialist plot to radically redistribute wealth. But Jeez, people, could you not have come up with some other way to phase this in?
Think about it: On May 1, virtually nothing will change for the positive in the accession countries. Granted, as Doug Arellanes points out, prices of imported wine will drop substantially; and easterners will be able to work legally in the frigid zones of UK and Scandinavia. Whoop-dee-doo.
Meanwhile, a number of other countries (importantly, Spain, Austria and Germany) have insisted on “transition periods” periods of their own for the free movement of labor. This transition period could well last beyond the end of the decade. Sort of takes the shine of EU accession, no?
Finally, the one thing ordinary people will probably notice the most is that every dish at their favorite restaurant just went up in price by a good 17%. Apparently, the Poles and Hungarians successfully negotiated a transition period for their VAT laws, and VAT on restaurants will remain low there. The Czechs, thinking the French proposal would pass, didn’t even try. As a restaurant owner myself, surely I’m more sensitive than ordinary people to the VAT change. But from a purely diplomatic point of view, I really don’t think this is a wise move. I for one plan to put a big sticker on our menu reading, “Welcome to the EU! All items now 17% more dear!”
The fact that the Czechs didn’t even try to negotiate a transition period puts a new spin on things: Perhaps they want the extra revenue from a higher VAT, but don’t want to shoulder the blame. They can call it an “EU tax” and remind the populace that they voted for joining. Seems terribly unsportsmanlike.