It is important to consider how to adjust tax structure for secure future - Aseradens

RIGA - It is important to consider how to adjust the tax structure for a secure future, Finance Minister Arvils Aseradens (New Unity) said during a Saima debate on economic development on Thursday.

Latvia's Stability Program was at the heart of the Saeima debate today.

According to Aseradens, it is clear that the fiscal policy is closely linked to the country's economic policy, which is why both the finance minister and the economics minister are presenting their reports today.

"I believe that at this very moment, when the geopolitical situation in the world is changing dynamically and the economic system as we know it is rapidly fragmenting, Latvia needs to choose its own sustainable growth model for future prosperity, taking into account multiple factors," said Aseradens.

This year, work on the Stability Program is, much more than usual, affected by developments outside Latvia, said the minister. "A small, open economy is always dependent on external factors, but the war in Ukraine, changes in the global trade and China's growing economic influence, as well as the uncertainty in relations between Europe and the United States following the presidential elections make it necessary to be clearly aware of our national interests," he said, adding that the main issue was Europe's competitiveness.

Europe is lagging behind, the European Union is an open economy and investment is growing more slowly, compared to its competitors, said Aseradens, stressing that we are vulnerable to external shocks.

According to the minister, the economies and societies of the EU countries are facing demographic changes, rapid ageing, technological changes, changes caused by globalization and environmental challenges.

''Without policy changes, this is expected to have a negative impact on the sustainability of our tax revenues, on the one hand, and to require increased government spending on the other hand, in particular to provide for a proportionally larger non-working population. It is therefore essential to consider how to adapt our tax structure to make it safe in the future, while ensuring sufficient tax revenues for fiscal sustainability and an efficient and fair tax system," said Aseradens.