While the Budget and Financial (Tax) Commission of the Seimas is headed by Janis Reirs, the value added tax will not be increased. Reirs himself stated this in the “Morning Panorama” program on Latvian television. According to the politician, work is not currently underway to increase the VAT rate – there are other ways to increase budget revenues. For example, you can reduce some costs. “The VAT will not be increased. Increasing the VAT is the laziest action of politicians. You don’t need to do anything, you don’t need to think – just add 1% and 150 million will immediately fall to you,” Reirs said. Let us recall that in early June, Finance Minister Arvils Asheradens (“New Unity”), in an interview with the Latvian Radio Labrīt program, said that one of the ways to cover potentially growing defense costs is to increase the value added tax rate by one percentage point. “If we have to significantly increase defense spending, and here we have two parts – external and internal security, then we have another small margin – an increase in VAT by one percentage point, which we can afford,” Ascheradens said. In turn, Reirs emphasized that VAT is a regressive tax that directly affects vulnerable segments of the population, so it is necessary to look for other ways to increase income. At the same time, the head of the Budget Commission noted that there would be changes to tax policy, but there would not be enough votes in the Seimas to increase VAT. As reported, a working group under the Ministry of Finance is currently developing proposals to change taxes. However, contrary to promises, the proposals were not made public before the holidays. Discussions are expected to resume in August. The main thing that entrepreneurs expected from the reform was a reduction in labor taxes. Minister of Economy Viktor Valainis (Union of Greens and Farmers) believes that it is better to take a short break now than to promise something in the tax sphere to entrepreneurs, and two months later take back your words and make difficult decisions. “There is a desire, but there is also a real situation,” Valainis said, speaking about tax reform. Earlier, President Edgar Rinkevich called on Finance Minister Arvils Asheradens to promptly inform about the progress of preparing the state budget for 2025 and planned tax changes. Rinkevich emphasized that as part of the creation of the state budget 2025, open communication with society about expected changes is important. “We need to realize that the process of creating a budget will not be easy, so we need to promptly begin to openly communicate with the public about expected changes, especially those affecting the tax system. All parties involved must understand that changes will require compromises,” the president said. Rinkevich noted that the priorities of the next year's budget should be internal and external security, as well as increasing competitiveness through investments in science and improving skills.
