Farmers demand resignation of finance minister

RIGA - Latvian agricultural organizations are demanding the resignation of Finance Minister Arvils Aseradens (New Unity), representatives of organization Farmers' Parliament informed LETA.

The resignation is being demanded by Farmers' Parliament together with the Council for Cooperation of Agricultural Organitions (LOSP), the Latvian Association of Agricultural Cooperatives, the Latvian Fruit Growers Association, the organization Latvijas Darznieks and the Latvian Association of Fruit and Vegetable Merchants.

Representatives of the organizations believe that the finance minister has so far avoided and ignored an open discussion with representatives of the industry to try to find a mutually acceptable solution on maintaining the reduced 5 percent value added tax (VAT) rate for vegetables, fruit and berries typical of Latvia.

"The Minister has lost the confidence of the entire industry "thanks" to his arrogant communication style. We can try to understand incompetence, we can try to understand ignorance about a particular sector, but we are unwilling to understand and accept the obvious unwillingness to listen to the sector and its deliberate drive to destruction," said Juris Lazdins, Chairman of Farmers' Parliament.

Guntis Gutmanis, Chairman of the Board of LOSP, said that if the reduced VAT rate is increased from 5 percent to 12 percent, the shadow economy will inevitably grow. "This is in clear contradiction with one of the country's stated priorities - to combat the shadow economy in Latvia. It is even more absurd that it is the Finance Ministry who has put the "reverse gear" in the shadow world," Gutmanis said.

As reported that on November 28, the coalition agreed to apply a reduced VAT rate of 12 percent to fresh fruit and vegetables. At the same time, the 12 percent VAT rate requires compensatory measures amounting to EUR 15.9 million, so excise duty rates will be revised.

The Agriculture Ministry previously stated in an information report that the fruit and vegetable sector in Latvia has developed significantly between 2017 and 2022. The area under fruit and vegetable production has increased by 5 percent, the value of production has increased by 46 percent and the value of exports by 77 percent.

Farmers have previously pointed out that increasing VAT on fruit and vegetables risks increasing the informal economy, increasing imports and their consumption, reducing the traceability of imported produce, and reducing the competitiveness of domestic producers.

The reduced VAT rate of 5 percent on fruit and vegetables applies from January 1, 2018, until December 31 this year.