Latvian parliament rejects opposition deputies’ proposal to temporarily reduce VAT for electricity

On Thursday, 16 December, Latvia’s parliament rejected legislative drafts from two opposition deputies that provided for temporarily reducing value added tax (VAT) for electricity.
The Saeima rejected amendments prepared by the Union of Greens and Farmers to the Value Added Tax Law and amendments prepared by deputies of Republic and Independent Faction.
Union of Greens and Farmers proposed reducing VAT to 5% for electricity, transmission services, and mandatory procurement components in 2022.
Deputies from Republic and independent deputies proposed keeping VAT reduced until 1 June 2022. Representatives of Republic and For a Humane Latvia proposed reducing VAT to 5% for natural gas.
ZZS deputy Armands Krauze suggested to his fellow Saeima deputies to vote for his proposed legislative draft adding that the majority of Latvia’s residents should not be driven into poverty and debt.
Ministry of Economics parliamentary secretary Ilze Indriksone stressed there are already multiple support mechanisms in place to help residents and businesses overcome the pandemic.
On Monday, 13 December, partners of the coalition reviewed the suggestion presented by the Ministry of Economics to reduce VAT for electricity and gas. However, the coalition could not reach an agreement.
At the same time, politicians did reach an agreement on the reduction of the electricity transmission tariff, said Minister of Finance Jānis Reirs at a press-conference after the meeting of the coalition.
The minister reminded that the MPC component in electricity bills is already reduced 65% and there is a EUR 20 benefit introduced for vaccinated seniors for the winter season. There is also the increased financial support for residents included in protected categories of users.
This week the coalition decided to develop a new proposal to be presented to the government. This includes a wide range of support associated with reduction of the transmission tariff and maintaining it until the end of the heating season. According to the minister, this support would have a positive effect on businesses.
Coalition partners also agreed to provide state housing aid to a wider range of benefit recipients, expanding the rules and aid amounts.