Officials remove tax on vegetables

China has removed a value-added tax (VAT) on vegetable distribution as part of an effort to combat rising food prices which contribute to inflation, The Wall Street Journal reported. Lifting the 17% tax will lower production costs for wholesale enterprises who usually pass costs on to consumers. “The lower costs benefit distribution companies, especially vegetable wholesalers,” said Gao Wang, an analyst at Beijing Orient Agribusiness. Increasing food supply has been a key goal for Beijing over the past year, particularly agricultural production and distribution. Inflation has receded on recent months, yet vegetable prices have continued to rise, even as other food categories can fallen. Data from the Ministry of Commerce shows vegetable prices peaked at RMB1.76 ($0.28) per kilogram in July, and have since fallen to around RMB1.34. However, average prices have risen by about 30% over the past eight weeks.