Romania has slashed its sales tax on food and non-alcoholic drinks in a move the government hopes will generate jobs, boost consumer spending and help the poor.
The tax drop from 24 per cent to 9 per cent in a country where people spend about one third of income on food came into effect Monday.
It applies to all sectors of the food industry, from producers to supermarkets and restaurants, with analysts predicting prices will fall by 12 per cent.
It will cost the budget about 5 billion lei ($1.23 billion) but Prime Minister Victor Ponta said better tax collection would offset most of it.
The government plans to reduce the sales tax for other goods and services to 20 per cent from 24 per cent starting Jan 1.
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