RIGA, April 19 (LETA) - In the context of the planned tax reform in Latvia, there will still be a discussion about a possible budget deficit, Economics Minister Arvils Aseradens (Unity) said on the public Latvian Radio today.
He said that the plans for the tax policy reform were almost ready but some of the proposals had yet to be balanced.
"There are the major questions that require answers, such as where to find extra money for health care, what will happen to the social budget, etc.," the economics minister said.
He said that the proposals about lifting the reduced value-added tax (VAT) rate on medicines and the tourism industry have been scrapped but there still will be discussions about changes in excise taxes and the budget deficit.
"We will have to discuss whether we can afford a budget deficit that our children will have to pay later. The other question is the significant incentives planned in the tax policy that would result in reduced tax revenue. It [the current tax policy proposal] means a strong private sector and a weak public sector," Aseradens said.
As reported, the overall direct negative effect from Latvia's planned tax reform in 2018 has been estimated at EUR 235 million, according to the Stability Program 2017-2020 prepared by the Finance Ministry.
Finance Minister Dana Reizniece-Ozola (Greens/Farmers) said that Latvia had to be prepared that the planned tax reform will widen its budget deficit at first. She indicated that when it comes to discussing tax reforms increased attention is usually paid to the expected reduction of tax revenues, but that it is also necessary to take into consideration compensatory measures, such as economic growth and the fight against shadow economy. “It has to be taken into consideration that solutions have been provided to the reduction of tax revenues," the minister said.
The proposed tax reform is still being debated and some questions have yet to be resolved in workgroups before the final version is put before the Cabinet of Ministers for approval at the end of April, she added.