Latvian agriculture organization suggests reducing VAT for food

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Reducing the value-added tax (VAT) for food products would be a better solution in the energy price crisis than the aid proposed to date, Kaspars Melnis, member of the Board of Cooperation of Agricultural Organisations (LOSP) told Latvian Television February 1.

He said that agriculture representatives would feel the state aid to compensate for energy price increases in different ways. “For someone, the bills will fall by 10%, but for another by 40%. (..) Not everyone will feel it the same way. This will lead to a more tense situation for some, but it will be more relaxed for another,” said Melnis.

He noted that LOSP has long been talking about cutting the VAT rate on fresh products like milk, meat, and bread. That would be a bigger relief in the LOSP's opinion.

“Whatever they say that entrepreneurs are not affected, but we all have employees who shop in shops and buy products. At this point, when all prices are rising, it puts a lot of pressure on businesses regarding wage rises, which at this moment creates further tension,” said Melnis.

Some farmers are struggling to survive, especially in livestock farming, according to Melnis. Some are also thinking about development and investment; however, inflation can “eat up investment money.”

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