Andrejs Ceļapīters from New Unity political party, unlike the leaders of this Latvian ruling coalition party, suggests maintaining the 5% value added tax (VAT) rate for fruits and vegetables typical for Latvia.
When asked about it in detail, Ceļapīters mentioned several arguments he intends to use to convince his party – New Unity – and other members of the coalition. The politician said that even with a seven or eight percentage VAT there is a risk of people
choosing grey or black import business for their goods.
This means a tax rate that is 5% higher may not yield the much-hoped revenue for the budget, said the JV deputy.
Because of the intense frost in spring, followed by intense drought in summer, the harvest of berries fruits and some vegetables, according to Ceļapīters, can be considered catastrophic. He believes it is necessary for the government to respond to the sector’s request to maintain a 5% VAT rate in this situation. He said that representatives of the agriculture sector have to compete with others from EU member states even considering that their respective countries’ VAT is less than 12% and they receive greater financial aid than Latvian farmers.
As previously reported, this year marks the end for the transition period with a 5% rate after the initial plan to apply a 21% VAT rate on fresh fruits and vegetables typical for Latvia. Later, however, government parties agreed and prepared a proposal for a 12% VAT rate for vegetables and fruits typical for Latvia.
Ceļapīters’ proposal, on the other hand, provides for maintaining 5% VAT
as a permanent tax rate.
[Previously it was mentioned that Ceļapīters – long-term head of Madona district and county, a notable politician of the People’s Party – avoided his responsibility as a member of the coalition to vote for the Istanbul Convention’s ratification in the Saeima, angering out-of-faction deputy and supporter of the ruling coalition Oļegs Burovs]
In order to apply fruits and vegetables typical for Latvia with a 12% VAT rate next year, it will be necessary to find EUR 16 million in the state budget, as Prime Minister Evika Siliņa previously admitted. It will be necessary to look for compensatory mechanisms so that it’s possible to coordinate the budget with the European Commission, said the Latvian PM.
As it is known, the reduced 5% VAT rate for fruits and vegetables is in force in Latvia since January 2018 and will remain in force until the 31st of December 2023.
Also read: Latvijas Radio: ZZS “forgets” about its own proposal to reduce VAT for food products
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