Economist: Baltic tax competition is self-destructive

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The competition between the Baltics over low taxes has been self-destructive, DNB economist Pēteris Strautiņš told Latvian Radio Friday.

"The competition in the Baltics over lower taxes has been self-destructive," said Strautiņš. According to him, there are other priorities now, like defense and infrastructure investments.

"If we lower taxes perpetually, it's as if we promote the import of luxury cars. Of course it's nice to look at these cars on the streets. But I don't think that's what's most important," he said.

Strautiņš did however admit that taxes in Latvia could be lowered for those receiving lower salaries and don't have any dependent persons.

In Estonia, where the government fell recently, there is talk over giving up the status of a low tax country.

"The fact that Estonians have finally come to their senses over the matter and it's absolutely proper that they won't try competing about percentage points over whose taxes in the Baltics are somewhat lower," said Strautiņš.

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