Coalition parties in Latvia disagree on changes to tax policy

Parties forming the new coalition in Latvia – New Unity (JV), National Alliance (NA) and Combined List (AS) – disagree on the topic of possible changes to the tax policy.
JV member Arvils Ašeradens stressed that new tax policy tools should be used very carefully, because the economy has entered a recession due to the policy employed by the European Central Bank. This is why any potential changes to the tax policy should be considered very carefully, said the politician.
National Alliance member Uģis Mitrevics said from the start his party has supported reduction of VAT for meat, fish, dairy products and other «products traditional for Latvia».

He mentioned: the majority of EU member states have already reduced VAT for food products.

On top of that, the Ministry of Economics, which is managed by the National Alliance, is in favour of VAT reduction of catering services.
According to Mitrevics, Combined List representative Uldis Pīlēns has publicly reported false information that the National Alliance is allegedly against reducing VAT for food products. The Saeima deputy says his party mentioned this intention both in its political programme and during negotiations regarding the government declaration. AS representatives, on the other hand, have said that tax reduction is not possible, and proposed dropping the issue altogether, said the NA member.
On Saturday, 26 November, there will be another meeting of the work group. The meeting will focus on the tax policy. During this meeting NA plans to raise the issue of VAT reduction for food products, said the parliamentarian. NA members will also propose to their coalition partners to reduce the labour force burden for businesses. The party has yet to reach any «ears», but they will continue pushing this topic, said Mitrevics.
When asked what might happen if neither partner agrees with the labour force tax reduction, the politician said there is a long road ahead.
Mitrevics said the topic of tax reduction taxes for heating-related construction materials and products is also «worth discussing». This topic was not discussed in the context of the government declaration, but after discussions of tax reduction for food products and labour force, NA representatives plan to put this topic on the table.

AS supports simplification of taxes for small enterprises.

This proposal does not have a negative fiscal effect. This is why it would be easier to implement, says AS politician Māris Kučinskis. The Saeima deputy reminds that AS has businessmen like Aiva Vīksna, Andris Kulbergs and Linda Matisone, adding that they have opinions on what needs to be done in this sector.
Once the government is formed the Ministry of Finance’s workgroup will discuss necessary steps to create a tax system that will motivate beautification and other lifestyle businesses coming out of the underground, said Kučinskis.
AS approves of the proposal to reduce VAT for primary food products. Discussions of this topic will continue during the declaration creation process, said the deputy. Kučinskis said it is necessary to equalise the labour tax with the rest of Baltic States. At the same time, however, tax changes influence the limited options of the state budget, reminds AS politician, explaining that the formation of the tax policy section in the government declaration is already under development.
Also read: Pīlēns: government declaration contains nearly 400 articles, with priorities mixed in with unimportant tasks