Латвия, Право, Финансы

Einars Repse.

Ministers from the Union of Greens and Farmers (ZZS) and the People's Party objected to the proposed reorganization of the Revenue Service, especially the proposed merger of the Customs Criminal Board with the Financial Police, reports LETA.

The People's Party Chairman, Justice Minister Mareks Seglins even demanded that the ministers vote on the proposal. Another People's Party representative, Foreign Minister Maris Riekstins had interrupted his vacation so he could be present at the government's meeting today.

Seeing that these two parties will not accept the proposed reorganization model, Repse said that the matter would be removed from the government's agenda. However, since it is an urgent problem, Repse, being the minister in charge of the Revenue Service, will unilaterally, and in accordance with the law, continue with the suggested Revenue Service reorganization model.

The Finance Ministry proposes several amendments to the Revenue Service's charter: reducing the number of the deputy directors general of the Revenue Service to just two as well as merging the Customs Criminal Board with the Financial Police.

The Finance Ministry insists that the Revenue Service must be reorganized urgently so the Revenue Service's expenditures could be reduced in line with the budget requirements.

The Revenue Service also objects to Repse's plans, fearing that the reorganization is being done for political reasons, and pointing out that experts should propose ways to reorganize the Revenue Service, not politicians.

Earlier this week Repse told reporters that other coalition partners besides the ZZS and the People's Party have no objections to the proposed reorganization of the Revenue Service. He stressed that the Revenue Service must be reorganized as soon as possible, because it is not normal that it works just four days a week.

As reported, the International Monetary Fund experts have also said that the steep reduction in the Revenue Service's budget, as well as problems with keeping the service's work unhampered, caused by structural changes, could make revenue administration less efficient and further afflict budget revenue.

To avoid it, several countries managed, although they had to take great pains, to spare their revenue agencies from budget cuts and extensive reorganization at a time of crisis, as the IMF experts said after an assessment of the tax and customs administration matters in Latvia.

In the given economic situation, most attention must be paid to reducing government agencies' costs, whereas tax administration must be as efficient as possible to ensure maximum revenue in the budget. However, the reduced budget of the Revenue Service and the ongoing restructuring of the Revenue Service may hamper tax administration, which will have a negative effect on budget revenue, the IMF said.

This is why sweeping reorganization of the Revenue Service is a risky strategy, the IMF pointed out.