Local Latvian papers ran this photo on their front page in protest of next year's tax increase
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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