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Tax on food cut to help poor

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 24pc to 9pc in a country where people spend about one-third of their income on food came into effect yesterday.

It applies to all sectors of the food industry, from producers to supermarkets and restaurants, with analysts predicting prices will fall by 12pc. The plan will cost the budget about five billion lei (€1.13 billion).