Latvian Saeima rejects proposal to reduce VAT for sectors impacted by the crisis the most

On Thursday, 23 September, Latvian Saeima rejected a proposal submitted by opposition deputies to reduce VAT for sectors of the economy impacted the most by the Covid-19 crisis from 21% to 5%.
The parliament reviewed amendments to the Value Added Tax Law submitted by the political party Republika Saeima. In the end amendments were rejected.
Saeima deputy Kaspars Ģirģens said the group of parliament deputies decided to propose amendments to the Value Added Tax Law, proposing a reduction of VAT to 5% for public catering service providers, beauty service providers, culture, sports and sport clubs, as well as tourist accommodations for the duration of state-imposed Covid-19 restrictions.
The proposal was submitted by members of Republika Ģirģens, Evija Papule, Ēriks Pucens, Vjačeslavs Dombrovskis, as well as Saeima deputy Ralfs Nemiro.
Ģirģens stressed that
Covid-19 pandemic and restrictions related to it have impacted catering, beautification, accommodation, culture and sports sector the most.
«In this situation sectors impacted by the crisis the most should be freed from the tax burden to prevent bankruptcies and prevent people from leaving to other countries,» said the politician.
According to politicians, VAT at 5% would help reduce prices and form savings, increasing demand, turnover, as well as assist companies overcome this crisis.
Ģirģens previously said that VAT reduction would help attract more workers, increase labour tax amounts and thereby compensate budget revenue drop caused by reduction of VAT.
Reduction of VAT would also reduce the percentage of grey economy in those sectors and its effect on honestly working companies, said the politician.