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Tax revenue falls EUR 573.7 short of target in nine months - Finance Ministry
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    Tax revenue falls EUR 573.7 short of target in nine months - Finance Ministry

    RIGA, Oct 28 (LETA) - The tax revenue collected in Latvia in the first nine months of 2020 fell EUR 573.7 million or 8 percent short of the target, LETA was told at the Finance Ministry.

    In the first nine months of this year, general government revenue totaled EUR 8.418 billion, down EUR 22.7 million or 0.3 percent from the respective period last year, and expenditure rose EUR 66.9 million or 8.4 percent to EUR 8.588 billion.

    Revenue declined due to lower tax revenue due to the Covid-19 pandemic affecting the economic situation in Latvia and the world.

    Expenditure rose because of additional expenses for pensions and social benefits, increase of wages in the health care sector and other sectors.

    Thus, after the first nine months of this year, there was a EUR 170.1 million deficit in the budget in contrast to a EUR 521.6 million surplus in the respective period last year.

    In order to curb Covid-19, restrictions affecting economic activity were introduced starting from the middle of March, as a result, the gross domestic product (GDP) fell 8.9 percent in the second quarter of this year. 

    In the third quarter of this year, the economic activity rose, and also revenue from taxes increased by 1.4 percent from the third quarter of 2019 and by 18.6 percent from the second quarter of this year.

    In the first nine months of this year, as the economic activity declined, tax revenue fell EUR 573.7 million or 8 percent short of the target.

    The Finance Ministry said that collection of practically all taxes fell short of the target, except for personal income tax that was collected by EUR 41.5 million or 3.3 percent more than planned.

    Value added tax (VAT) was by EUR 284.3 million or 13.5 percent lower than planned, and by EUR 105.8 million or 5.5 percent lower than in the respective period last year.

    Revenue from excise tax was by EUR 109.6 million or 12.2 percent lower than planned and by EUR 14.3 million or 1.8 percent lower than in the respective period last year.

    Social insurance contributions in the budget fell EUR 138.6 million or 6.2 percent below the target and by EUR 19.8 million or 0.9 percent lower year-on-year.

    The Finance Ministry also informed that on October 22, Eurostat published the notification results for October 2020, and Latvia's general government budget deficit was EUR 174.2 million or 0.6 percent of the gross domestic product (GDP) in 2019, while in 2020 the deficit is projected at EUR 2.1 billion or 7.6 percent of GDP.

    • Published: 28.10.2020 09:26
    • Raivis Spalvens, LETA
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