Analytics, Financial Services, GDP, Latvia, Taxation

International Internet Magazine. Baltic States news & analytics Wednesday, 27.05.2020, 18:32

Latvia has lost 1% of GDP as a result of 2017 tax reform - expert

BC, Riga, 10.10.2019.Print version
Latvia has been losing around 1% of GDP each year due to the loss of budget revenue resulting from the 2017 tax reform, Inna Steinbuka, a member of the Fiscal Discipline Council, told journalist LETA.

he expert said that the reform, which was launched two years ago, will continue to impact the economy also in following years but that the tax revenue lost so far amounted to 1% of GDP. 

Steinbuka indicated that the negative effect was caused primarily by reduced revenue from corporate income tax. This year, for instance, there is a plan to collect around EUR 200 mln in corporate income tax, but only EUR 18 mln have been collected so far. 

"It is hard to imagine how the target for corporate income tax could be met by the end of the year," the member of the Fiscal Discipline Council.

He noted, however, that increased revenue from various social taxes compensated for the reduction of budget revenue from the corporate income tax. 

"Tax revenue is growing at the moment, but it might be higher if not for the tax reform," Steinbuka said.

According to the Fiscal Discipline Council's forecast, some tax revenues will fall short of the target also next year.

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