Latvian press protests VAT tax

2008-12-11
TBT Staff in cooperation with BNS

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

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 medicalgoods, 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 thegovernment budget. At the same time, prices for goods and services will goup, which is likely to further reduce consumption and fuel inflation. Theprice hikes will first of all affect households, especially in thelow-income group.

In the circumstances of the global economic crisis the existing VAT ratesare 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 ofgoods and services.

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