Parliament drops property tax

RIGA (BNS) - The Latvian Parliament on Nov. 25, in the final reading, adopted amendments to the law on real estate tax envisaging to apply the tax on buildings and construction, thus removing the property tax.

The rate of the property tax varies between 0.5 percent and 4 percent depending on the value of the property. The real estate tax rate is 1.5 percent. Currently applied only to land, the real estate rate will be reduced to 1 percent in 2002.

Both taxes are collected by local authorities and, if the property tax were left in place, the local authorities would raise 44.9 million lats from the combined taxation. Abolition of the tax would reduce revenues of the local authorities by about 5.4 percent in 2000.

The amendments also say that of the real estate of religious organizations, only the stationary property used for religious activities will be exempt from real estate tax as of 2001. Currently the entire real estate of religious organizations is exempt from the real estate tax.

The amendments are effective Jan. 1.