The period of zero VAT on certain basic consumer goods – baby milk, nappies, female hygiene products and frozen fruit and veg – that was due to expire at the end of the year, will instead be extended until the end of 2026, the government decided. The proposal for the extension was approved by the council of ministers on Wednesday and announced by Finance Minister Makis Keravnos, who pushed the bounds of credibility when he claimed that zero VAT on these products, “directly reduces the expenses of vulnerable households.”  

His hyperbole did not end there. “This measure increases their (the vulnerable) disposable income and improves the standard of living,” said Keravnos. He admitted that the measure was not justified as the reason for which it was introduced, high rate of inflation, no longer existed; for 2025 it is zero.   The government, however, “believes that the measure serves the vulnerable population, the vulnerable citizens of our country and we want to maintain it.” How many vulnerable citizens are served, the government has never said, because this is a publicity exercise more than a social measure.

Vulnerable families with babies might save €5-10 on nappies, baby milk and female hygiene products each month in VAT but this would not bring a real increase in their disposable income and a marked improvement in their standard of living as Keravnos claimed. As for vulnerable families with male schoolchildren, who drink no baby milk, do not wear nappies and have no need for female hygienic products, there would be no improvement in their standard of living – not even the imaginary type that the government has been peddling.

The government maintained zero VAT on a small number of basic goods, for no other reason than that it looked good. The healthy state of public finances made it easy for it to keep the measure and to market it as social support for ‘vulnerable’ families even though it was completely untargeted and benefited wealthy families without making a mark on their standard of living.

It is irresponsible to allow communications consideration to shape economic policy. It was bad enough that the unprecedented step of zeroing VAT on some products was implemented to create the impression that the government was helping people deal with high prices, but to keep it in place when it is totally unjustified by economic conditions and market it as support of vulnerable groups is another level of cheap populism. What is worse is that the zeroing of VAT has now become established, by the Christodoulides government, as a social policy measure, something unheard of in developed countries.

This government, unfortunately, specialises in policy that is primarily concerned with earning publicity points, regardless of the harm this may cause the economy.