Gas tax delayed

RIGA - The introduction of excise tax on natural gas in Latvia must be put off until later, says the Public Utilities Commission Council Chairwoman Valentina Andrejeva in an interview with LNT television on July 20, reports news agency LETA. Saeima’s Economic, Agricultural, Environmental and Regional Policy Committee decided last week to add to the Saeima amendments to the law on excise tax, according to which the excise tax on natural gas will be introduced on Jan. 1, 2014, not on July 1 this year.

Andrejeva commented that, due to the natural gas pricing mechanism in Latvia, gas prices in Latvia were fourth lowest in Europe this past winter. Now, however, the tariff will increase 40 percent; additionally, another 6 - 8 percent increase will be caused by the new excise tax on natural gas.

The council chairwoman reminded that the Public Utilities Commission had already said back at the beginning of this year that the excise tax on natural gas should not be introduced this year in Latvia. Andrejeva stressed that the new tax will boost the number of households that are unable to pay for heating. And if the value-added tax on heating is hiked from 10 percent to 21 percent as of Jan. 1 next year, that would have catastrophic consequences, she said.

The Association of Latvian Local Government said previously, based on data from 74 local governments, that residents’ debts for the last heating season stood at 20 - 30 million lats (42.8 million euros). This is an inconceivable figure, worse even than in 1993, when the heat supply system was going through a severe crisis in Latvia.
It is very unlikely that residents will be able to settle their debts in the summer. People are simply unable to pay their heating bills, and there is no compensatory system in place to solve this problem, the association said.