Latvian press protests VAT tax

Dec 11, 2008
TBT Staff in cooperation with BNS

RIGA - Press publications throughout Latvia have decried a proposal from Prime Minister Ivars Godmanis to increase the value added tax (VAT) rate and move newspapers, magazines, bulletins and other periodicals to the base VAT rate.

In practice, this would mean that publications -- along with medical equipment and medical goods, veterinary medicines, books and maps, and hotels -- would see a value added tax hike to 21 percent from 5 percent.

Latvian news publications on Thursday published an open letter to the government not to impose the increased tax rate.

The tax hike, the ministry said, will provide additional revenues to the government budget. At the same time, prices for goods and services will go up, which is likely to further reduce consumption and fuel inflation. The price hikes will first of all affect households, especially in the low-income group.

In the circumstances of the global economic crisis the existing VAT rates are no longer able to ensure the planned and necessary budget revenues, the Finance Ministry notes.

The VAT hike is expected to increase price in virtually all categories of goods and services.

The amendments are to take effect as of Jan 1, 2009, but they have yet to be passed by the parliament.

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