Trade unions opose VAT on apartment rent

  • 2000-03-09
RIGA (LETA) - The Latvian Association of Free Trade Unions is against value-added tax (VAT) on apartment rental fees, said Andris Kravalis, the association's deputy chairman.

The association believes that rent and utility payments are high enough already at this time.

Kravalis suggested wages be raised in proportion to the increase in rent and utility payments, especially the official minimum monthly wage.

Kravalis said that at this time, an average resident spends 30 percent to 50 percent of a salary on apartment rent and utility payments. Therefore it is not normal to hike up the rent even more. Besides, the minimum salary in Latvia is one of the lowest in Europe, said Kravalis.

Kravalis said the minimum wage should be steadily raised - in about 2.5 years - to the official subsistence level, which is 83 lats $141).

Minister of Finance Edmunds Krastins said in an interview on Latvian State Television that there are no grounds for concern, and that apartment rent will not be padded with VAT in the near future.

Krastins noted that the European Union requirements did not say as well that VAT must be imposed on apartment rent, and imposing VAT would pertain only to managers for maintenance of apartment houses.

There will be no VAT imposed if the state or a municipality is responsible for maintenance of the apartment house, or if an apartment was privatized as a result of accelerated privatization, said the minister.

According to the newspaper Diena, apartment rental fees will increase 18 percent, effective next year, because of VAT.