The Ministry of Economy is offering to continue to pay Covid-19 support for individual industries subject to restrictions. It is no longer planned to pay the downtime benefits, but it is proposed to issue grants and salary supplements for the drop in turnover by the end of August. It would cost the state budget €60 million. The ministry also believes that Covid-19 benefits could be replaced by a reduction in value-added tax (VAT) to 9% for affected industries for two years.
“Those restrictions that are in catering, distance, safety corridors that can be used, reduce the ability to work or turnover by 60-70%, because simply the vaccination proportion is below 30%,” said Jānis Jenzis, head of the Latvian Restaurant Association. He also added that downtime benefits are no longer necessary because they do not encourage work, but because of restrictions other support tools must be continued. This opinion is backed by the Latvian Association of Tourism Agents and Operators and Latvian Health and Fitness Association.
The Minister of Finance did not agree with the continuation of benefits, but said in a written response that the Ministry of Economics would continue to work on the proposals and the government would see them further. On the other hand, the reduction of VAT can only be discussed in the process of adopting the State budget.
Finance Minister Jānis Reirs urged entrepreneurs to adapt to the situation: “Compared to other countries, Latvia has provided very generous support to entrepreneurs and workers in order to preserve jobs and economic development. It is clear that Covid-19 will have an impact on our daily lives and everyone needs to adapt to the new situation. No country can afford to support entrepreneurs in the long run, and no country does it in the long run. Entrepreneurs need to look for other, real-time business models."
Data from the State Revenue Service show that a little over €600 million has been paid in downtime benefits, wage subsidies and grants since December. Benefits for July are no longer provided.