RIGA - During the work on the 2013 state budget, the government should consider reducing the Value Added Tax [VAT] rate, the Bank of Latvia President Ilmars Rimsevics said in an interview with the Neatkariga newspaper.
"All the opportunities must be weighed. We cannot influence the price of oil, but improving competition and transparency in the pricing process is possible," said Rimsevics. It will be very sad if, in case the value-added tax is reduced, no price reductions follow, and the smaller tax rate only increases retailers' profit.
It is very important that the government does not reduce taxes on labor and does not increase the government-regulated prices, believes Rimsevics.
At the same time, the government must not redistribute available funding if budget revenue exceeds the projections. Such funds should be used to reduce the budget deficit, as this will mean greater macroeconomic stability in the future and, as a result, an increase in Latvia's credit rating at the end of the year.
As reported, today the government begins the work on the 2013 state budget with discussions about the budget expenditures in 2013-2015 and reviewing ministries' requests for additional funding, 231 million lats in total.