The Ministry of Agrarian Development and Irrigation of Peru (Midagri) reported this Wednesday that the price of a kilo of chicken in the retail markets of Lima fell to S / 8.41, this represents a decrease of 87 cents compared to the price of a week ago.
In addition, according to the report of the Supply and Price Information System (Sisap), the decrease amounts to 4.5% in relation to the prices that were in the retail markets this Monday.
Along these lines, there has been a reduction of S/ 3.51 compared to what a kilo of chicken cost at the end of March this year, where the price reached S/ 11.92.
Exemption from VAT on food
It should be remembered that, as a measure to combat the reduction in food prices, Congress approved on April 12 the ruling acknowledging the observations made by the Executive Branch, establishing the exemption from the general sales tax ( IGV) for food products of the basic basket, where chicken is found.
The validity of the IGV exemption for food only applies from May 1 to July 31, 2022. In this sense, it is expected that the price of chicken will be further reduced in the coming weeks to the benefit of consumers and households. Peruvians.
However, for some specialists this measure would not be as effective as the Government proposes.
By how much would prices be reduced?
Jorge Carrillo Acosta, professor and finance expert at Pacífico Business School, stated that with the VAT exemption, food prices would not decrease by 18% as projected, but only by approximately 15%.
“It should be noted that said reduction, if it were transferred in its entirety to the final consumer, would reduce the prices of these goods by 15.25% and not by 18% as some indicate, since this tax is 18% of the “sale value” , and not the “sale price”, which is the final amount paid (sale value + IGV = sale price)”he claimed.
For example, if a kilo of chicken cost S/ 10, with the VAT reduction it would be worth S/ 8.47, provided that this benefit is transferred by 100%.
“Likewise, it is estimated that, in practice, the percentage of price reduction is lower, since the businesses recovered the IGV of the purchases with the IGV of the sales (tax credit), and in the case of being exempt the product In the end, the IGV paid on some purchases will become an “extra cost” (it will not be recovered), having to be transferred to the consumer”Carrillo added.
Finally, the specialist estimated that this measure would have a total impact of S/ 500 million in lower collection during 2022.