Latviski English По-русски
Monday 18.11.2019 | Name days: Doloresa, Aleksandrs

Finance Minister: lower VAT rates for basic goods – effective only for half-year

(No Ratings Yet)

Minister of Finance Andris Vilks

The issue with lower value added tax (VAT) rates for basic food products is that it is very difficult to administer, the Minister of Finance Andris Vilks indicates to LNT broadcast 900 sekundes.

Administration problems appear at the point when the basic goods have to be defined, for instance, the type of bread, as there are different kinds of bread, says Vilks, adding that the European Union (EU) is still struggling with this administrative section.

To his mind, lower rates for essential goods are possible in developed, large countries like Germany, Poland, but not in the Baltic States. Latvia is a small country and is not able to control its prices; therefore, such introduction of reduced rates would give an effect only for three to six months, Vilks claims.

Overall, it will be possible to assess next year’s economic results in the second half of 2011. As concerns the tax raise, it will be difficult to avoid it, affirms the Minister, noting the tax increase should be applied next year, and not in 2012.

Vilks believes there is no evidence that consumption could reduce due to the tax policy. In recent months it was up by 6%, and next year with the overall economic background improving, this trend will continue.

The situation in labour market has become more positive, and the unemployment rates, as well as job positions could increase next spring, Vilks concedes. Similarly, the situation in the eurozone is calming down and the domestic market consumption begins to recover.

Moreover, the Minister of Finance points out forecasts for Latvia are relatively conservative, foreseeing that tax revenues next year will be over exceeded.

The bulk of reforms, which the government is carrying out, could be considered as long-term activities. Vilks indicates the government also aims to reach certain progress regarding education and health care.

Regarding the reduction of contributions to the 2nd Tier pension scheme –payments will be returned to their previous level as soon as the budget is settled. Vilks mentions there are constant talks with social partners; however, the requirement profile is wide and diverse. There are different requirements for business and employers and the government has to balance them.

The Minister disagrees that raising the minimum wage is not topical at the moment, because in this way employees’ salaries will attain the sum that is actually received.

Vilks also highlights that there will be no government resignation, as the ministry is open to compromises, colleagues have a very harmonised work, and everyone understands that something has to be reduced, so the solutions are looked for together.

Leave a reply

  1. nmmm says:

    Short-term solutions will not solve the issue.. :(

  2. Kiki says:

    But if the reduced rate would be applied only to basic food?

  3. Hans says:

    Even if reduced rates are effective for only several months, this measure would give some time to maybe consider more options.

  4. Interesanti gan! says:

    Piemēram,Vācijā samazinātā-7% PVN likme ir efektīva kopš tās ieviešanas 1993.gadā!

  5. Murgi! says:

    Ja jau tā būtu,tad pirmām kātrām jau sen tiktu atcelta 0% PVN likme bāzes pārtikas produktiem-Anglijā,Kanādā,Jaunzēlandē,Dienvidāfrikā,Zimbabvē,Dienvidkorejā,Meksikā,Indijā,Bangladešā,Šrilankā,Pakistānā,Afganistānā,Venecuēlā,Kolumbijā,Brazīlijā,Hondurasā,
    Belizā,Kostarikā,Fidži,Gajānā,Montserratā,Tobāgo un Trinidādā,Namībijā,Dominikānā u.t.t.

Week in Lithuania: President pardoned two Russian spies, climate action plan approved and bomb defused

Last week, in Lithuania, the key news stories were a presidential pardon to Russian spies, the approval of a climate change action plan getting approved and the start of a mission of the International Monetary Fund.

BNN summary of the week: budget 2020; excellent Latvian filmmakers; doctors’ worries

The patriotic week passed in Latvia not only with the celebration of the 100th anniversary of Latvian army’s victory over Bermondt forces but also with intense discussions for the country’s budget of 2020. The 25-hour-long debates became so heated in the end the opposition left before the final vote. Because of that, the budget project was adopted with votes from only 57 deputies.

October’s inflation in Latvia higher than average in EU and Eurozone

In October 2019, inflation in Latvia was higher than the average in the European Union and Eurozone, according to information published by Eurostat on Friday, 15 November.

Z-Towers examination reports to be evaluated by construction experts

The State Construction Control Bureau of Latvia has commenced an administrative process and plans to assess the work performed by certified construction experts on Z-Towers. This includes assessing reports associated with the project, as confirmed by the office’s representative Elīna Balgalve.

Riga’s Vice-Mayor dismisses the board of Riga Central Market

Vice-chairman of Riga City Council and shareholder Vadims Baraņņiks has dismissed the board of SIA Riga Central Market.

Unemployment in Latvia drops to 6%

Latvia's unemployment rate constituted 6.0 % in Q3 2019. Compared to the previous quarter, unemployment rate fell by 0.4 percentage points, while over the year it reduced by 1.0 percentage points.

Employment rate in Latvia reaches 65.6% of the population

917.8 thousand people or 65.6 % of the population of Latvia aged 15–74 were employed in Q3 2019. Over the year, employment rate grew by 0.3 percentage points, and number of employed persons fell by 2.3 thousand. During the period, population declined faster than the number of employed persons.

SEB share price heavily affected by suspected money laundering in Baltics

Swedish banking giant SEB AB has seen its stock value sinking by 15% as it awaits a programme by the Swedish public broadcaster over suspected money laundering in the Baltics, where the name of the bank would also appear, Bloomberg reports.

State Security Service detains three persons for illegal arms supply to African countries

Latvia’s State Security Service has detained three persons for illegal supplies of arms to African countries under EU and UN sanctions, as mentioned in VDD’s report.

Investigators of MH17 downing point to close Putin ally

Dutch-led investigators of the downing of the 2014 flight MH17 over Ukraine have published a series of phone intercepts, among them one between former senior Kremlin official and pro-Kremlin separatists rebels blamed for the crash.

Harmony halts work in Riga City Council coalition until GKR makes up its mind

Political party Harmony’s faction in Riga City Council has decided to halt its work in the coalition until Honour to Service Riga makes up its mind in regards to cooperation with Independent Deputies Faction, as confirmed by Riga City Council’s vice-chairman Anna Vladova on Thursday, 14 November.

To increase parties’ independence, Saeima decides to boost support for them

In the final reading, Latvia’s Saeima approved controversial amendments to the Law on Financing of Political Organizations, significantly boosting state support for political parties.

Sweden sells off Australian, Canadian bonds over carbon footprint

Sweden’s central bank has stated it had given up bonds in the mining regions of Australia and Canada as Riksbank said the greenhouse gas emissions of both countries were large.

With 57 deputies present, Latvia’s Saeima adopts state budget for 2020

After two-days’ worth of discussions, Latvia’s Saeima finally approved the state budget on Thursday, 14 November, with 57 votes in favour, as reported by Saeima’s press-service.

Germany to partly lift solidarity tax for support of ex-communist east

Germany has had since 1991 a solidarity tax requiring people in western Germany to support the east of the country to support its economic development. The government has decided to largely lift it from 2021.

Lithuania set to expand residential real estate tax payers’ base

With the economy prospects for the new year looking bleaker, the Lithuanian government is scrambling to find new ways to prevent a looming drought of state coffers. The Lithuanian legislature, Seimas, has revisited this week the idea of taxing polluting cars, real estate and bank assets.

Estonian skiing ex-coach convicted of doping facilitation

A court in Estonia has found Mati Alaver, a former national skiing coach, guilty of doping facilitation and convicted him to probation.

Tourist upturn in Latvian accommodations reaches 2.27 million in 2019

1.03 million foreign and Latvian visitors stayed at Latvian tourist accommodation establishments Q3 2019, which is 0.5 % more than Q3 2018. Compared to corresponding period of the previous year, the number of nights spent by visitors increased by 1.5 %.

Central Election Commission permits signature collection for Seaima’s dismissal

On Thursday, 14 November, Latvia’s Central Election Commission registered a signature collection process initiated by Varu Latijas Tautai and Centre Party for the dismissal of the 13th Saeima.

Corruption watchdog once again punishes VID officials for illegal information acquisition

Corruption Prevention and Combating Bureau has once again punished officials of the State Revenue Service who were caught illegally acquiring information from systems.

Saeima decides: unemployment benefit to be paid for eight, not nine months

From 2020 onward unemployment status will be provided and benefits paid for eight months instead of nine, BNN was told by Saeima’s press-service.

Lithuania pushes for NATO ally involvement in EU defence projects

Lithuanian National Defence Minister Raimundas Karoblis has emphasised that European Union’s defence projects should be open to NATO allies from outside the EU to join in.

Healthcare trade unions to decide on future protests in Latvia

Latvian Trade Union of Health and Social Care Workers council plans to decide on future protests on Tuesday, 19 November, as confirmed by the trade union.

Estonia registers lowest unemployment in century

The unemployment rate in the century-long history of Estonia has dropped in third quarter of the year to a record low of 3.9%, the country’s official statistics show.

Minister: suspicious interest for Latvia’s military objects considered medium-high

The level of suspicious interest of foreign people for Latvia’s military objects using different research methods, including drones, is considered medium-high, says Latvia’s Defence Minister Artis Pabriks.

Do NOT follow this link or you will be banned from the site!