Concerns about smaller-than-planned tax revenue in Latvia

With the inflation shrinking, there are concerns whether Latvia's tax revenues will be at the level previously planned, Finance Minister Arvils Ašeradens told Latvian Television on March 20.

The minister said the Ministry of Finance had already reduced its economic growth forecast. If previously it was estimated that Latvia's gross domestic product (GDP) would increase by 2.4% this year, this forecast is now at 1.4%.

At the same time, the Ministry of Finance (FM) is concerned that inflation numbers are decreasing, Ašeradens said. The FM had planned an annual increase in inflation in January at 2% level, but the true figures were lower – the average level of consumer prices increased by 0.9%.

“We can also approach the deflationary line,” Ašeradens noted, saying FM is evaluating the government's revenue and spending forecast very carefully at this time. In April, FM is preparing to submit a stability program to the government with a view to what Latvia's finances will look like in the next four years.

“I am very cautious whether the state's tax revenues will meet the level planned,” the minister said.

“We are assessing each tax group very carefully at this time. Labor taxes are performing very well, but value-added tax (VAT) revenues don't look that good. ”

According to LETA's archive, EUR 1.292 billion was collected in tax revenues in January this year, which is 29.3 million euros or 2.2% less than planned. Tax revenue accounted for 1.013 billion euros, which is 37.5 million euros or 3.6% less than planned, while in the local government budget tax revenue was 211.9 million euros, which is 10.3 million euros or 5.1% more than planned. VAT revenue in January was EUR 342.5 million, which is 6.4% less than planned, while personal income tax revenue accounted for EUR 270.2 million, which is 3.9% more than planned.

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