PM: Health Ministry proposed raising VAT

Raising the Value-added tax (VAT) to 23% from the current 21% is among the suggestions by the Health Ministry to fund the industry, and the proposal will be reviewed, said PM Māris Kučinskis appearing on LTV's Rīta panorāma Tuesday.

Kučinskis said that the Health Ministry had proposed raising the VAT during tax policy discussions after a suggestion was voiced to reduce labor taxes.

As cutting labor taxes would reduce budget income, argued the ministry, it'd become even more difficult to ensure the healthcare system stays operational, and alternative funding sources would be needed to be found accordingly.

However this remains just a suggestion and will be reviewed in the future, said the PM.

The Finance Ministry is working on a reform of Latvia's tax system and the first discussions over the matter are to start in February.

"The next big task is that we have to jointly bust the myth that people can choose not to pay taxes, that it's not a crime," he said.

The government is planning to produce proposals for a tax reform by April 1. Previously the World Bank reviewed Latvia's tax policies, suggesting the country to adopt a progressive tax and reduce the tax burden on low-wage earners.

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