Analytics, Demography, Latvia, Market Review, Taxation

"Looking at the demographic situation in our country, it becomes obvious that tax hikes are inevitable. The number of population or existing and future tax payers keeps dwindling. But, instead of reducing the financing required to maintain the country with its infrastructure, roads, schools, hospitals etc. in proportion to the number of population, it has to be increased to compensate for inflation and to meet the growing demand for good-quality public services," the authors of the study said.

To this end, the amount of tax revenue per capita will have to be increased in the future. However, continuous tax hikes will in no way stimulate Latvians to stay here and start a family therefore immediate action is required to improve the demographic situation otherwise it will be very hard to stop the downward spiral.

Although the birth rate has increased slightly, it is not enough to prevent population decrease. In the last five years Latvia's population kept dwindling by 0.5% on average.

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