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Restaurants in the Baltic States threaten to strike: prices scare customers, taxes scare entrepreneurs

Рестораны стран Балтии грозят забастовками: цены пугают клиентов, а налоги — предпринимателей

The catering sector in all three Baltic countries is outraged by the taxes and assures that if the situation does not change, many companies will have to close. Businesses still intend to talk to politicians and look for solutions, but if this does not produce results, a strike awaits, writes rus.delfi.lt. Before the war, most tourists in Latvia were from Russia. Now there are none left, so the catering sector is experiencing a crisis. In addition, restaurateurs unanimously say that the industry has not returned (and is unlikely to return) to pre-pandemic levels. As reported, at the beginning of 2024, the tax debt of enterprises operating in the catering sector reached 44.2 million euros, which is 79% more than before the Covid-19 pandemic, or at the beginning of 2020. In Estonia, they plan to raise VAT to 24% in order to increase defense funding. For comparison: in most EU countries, VAT in the catering sector averages 12.5%. In Lithuania, restaurateurs are also groaning under the tax burden. Since the beginning of the year, 33 restaurants have gone bankrupt in Lithuania. The sector's turnover has decreased by 8% in 7 months. President of the Lithuanian Hotel and Restaurant Association Evalda Šiškauskienė calls what is happening a genocide of small businesses. Restaurant owners say that while there are still customers, people's habits have changed – people have started saving. "They used to spend more on alcohol, they would buy a full package, they would buy champagne. That's not the case now. They go out to eat, enjoy the food. They buy less," Ertlio namas representative Tomas Rimidis told LNK journalists. On January 1, Lithuania abolished the preferential VAT on catering services. They hoped that this decision would increase the budget's revenue by 140 million euros. "But they are somehow silent about other taxes. After all, there will be no income tax or Sodra taxes. According to our calculations, they will pay 27 million euros in benefits. Because people will be left without work," said President of the Lithuanian Hotel and Restaurant Association Evalda Šiškauskienė. Restaurants complain about high taxes and plan to raise prices by another 10%. "I think it is unfair that the government, the authorities, do not encourage paying taxes, they encourage the restaurant sector to go "into the shadows," said Rimidis. Prices in restaurants now surprise not only locals, but also emigrants. "10 years ago, when I came to my homeland, I could have breakfast, lunch and dinner in a cafe, now I can afford lunch or dinner," said one woman. "The prices are approaching European ones. Several years ago they were different. But I see that quality also determines such prices." "Sometimes we go in, but the prices in restaurants are scary," said another interlocutor.

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