The VAT with a single 17-percent rate has been strongly criticised by the Opposition and people with lower incomes, while the authorities justify this measure and the single rate with their efforts to curb the grey economy and strengthen the country's budget.
Already before January 1, prices of bread and milk, which are not exempted from VAT, went up, and trade unions, pensioners and other more vulnerable categories of society expressed concern about a higher rise in living costs.
However, according to some estimates, prices of basic foodstuffs will not rise by 17 percent.
The government also threatened to impose fines on dealers and shop-keepers who might use the introduction of VAT to put high margins on their goods.
In 2006, VAT is likely to bring an additional 500 million marks into the state budget.