The tax reform proposed by the government will most likely respond to the challenges of the economic development, Prime Minister Evika Silina (New Unity) said in an interview with the Latvian Television today.
“The tax issue is not in a fog,” the prime minister said, stressing that there is a wish to make the plan clear enough before revealing it to the public.
She said that there were no plans to increase the value added tax (VAT). And this poses a certain challenge to find the funding in the promised areas, including to reduce the tax burden on labor and reduce inequality.
“So, the challenges are not small. A lot of work has been put into finding alternative sources of funding other than simply increasing VAT,” she said.
Asked how to increase the money available to local governments, whether it would be a budget grant or a new approach to harmonizing local government finances, Silina said that new solutions were unlikely at the moment.
The prime minister stressed that the government wants to enable the country’s economy to grow and called on municipalities to think about how to support entrepreneurship.
On June 6, Finance Minister Arvils Aseradens (New Unity) said in an interview with the Latvian Radio that one of the ways to cover the potentially rising defense spending is to raise the VAT rate by one percentage point.
Silina wrote on Facebook that she understands very well the people who react to any potential changes that may affect their income or increase their expenses. Silina expects from the finance minister a budget that is not at the expense of the people and does not worsen the economic situation of the population.
Currently, the standard VAT rate in Latvia is 21 percent.
Source: BNS
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