Unity wanted to reduce VAT - MP Dombrovskis

RIGA - Unity wanted to reduce the value added tax [VAT] rate; this motion was not included in the government declaration, Saeima Economic, Agricultural, Environmental and Regional Policy Committee Chairman Vjaceslavs Dombrovskis (Reform Party) said in an interview with the newspaper Neatkariga Rita Avize.

Dombrovskis disagreed with the statement that the Reform Party has not managed to convince its coalition partners to reduce labor taxes by nine percent in three years. "We already have a five percent decrease and a considerable share will come from shifting the tax burden from labor force onto real estate. I believe that there will be a nine percent tax cut in three years," explained the politician.

Asked about the Reform Party's emergence from Unity's shadow, taking into account both parties' ratings and agreeing to Unity's VAT reduction, Dombrovskis pointed out that the recently approved personal income tax rate reduction by five percent is a significant accomplishment.

As reported, on May 24, Saeima almost unanimously voted for amendments to the Law on Personal Income Tax in the final reading; according to the amendments, the personal income tax rate will be reduced from 25 percent now to 24 percent in 2013. The amendments stipulate that the personal income tax rate will be 24 percent from January 1, 2013, then reduced to 22 percent in 2014 and 20 percent in 2015.

VAT will be reduced one percentage point on July 1 this year, from the current 22 percent to 21 percent.