The country has discovered its tax heroes. The State Revenue Service (SRS) named the largest Latvian taxpayers of 2015.
The leader in taxpaying became a fuel company Statoil Fuel & Retail. Which is not surprising — from each sold litre of benzene or diesel about 80 percent go to the public purse as VAT and excise tax. Moreover, this sector is strictly regulated by the state, therefore Statoil has transferred as taxes to the public purse every last cent. In particular: 172 million euro.
All this seems, of course, good, but there is another list of companies as well. The total arrears in payments to the State budget, administered by SRS, as at 1st March this year make up nothing less than 1.452 billion euro. Where 897.49 million euro (61.79%) are debts beyond real collection.
Trends are yet worse than the figures – debts are growing. For the first three months of this year the total tax arrears grew by 2.5%, including growth of debts beyond collection by 1.96%.
In such a situation the high action of the state financial control is understandable. But they can overdo and empty the baby out with the bath water. But, fortunately, the examples are around us. In late March SRS arrested assets of the largest in Latvia grain processor Dobeles dzirnavnieks, which just last year paid taxes in the amount of 1.86 million euro. Eventually, common sense prevailed: while in – house lawyers and SRS are debating over the amount of tax surcharge the undertaking is allowed to work and earn.
In general, one can establish that the Latvian tax system nowadays is advantageous to enterprises engaged in manufacture of products, where the lion’s share of the prime cost is made from raw materials lowered in price over recent years. And it is disadvantageous to those, which create services with high added value, because here expensive brains are required rather than cheap diesel fuel. Meanwhile, labour tax in Latvia looks uncompetitive against the background of other Baltic States. As a result, the achievement of the declared objective – facilitation to the development of services with high added value in Latvia – is being hampered by the existing tax system.
Yet another minus of the Latvian taxes lies in their unpredictability — prior to the scheduled elections the promises are given to lower tax burden, than tax deficiency is established and an enactment on increase of tax rates is passed out. The last example – frozen digression of personal income tax and unexpected increase in fuel excise tax.
Also awkward attempts to introduce progressive taxation in Latvia give rise to certain criticism. This refers to an additional tax burden on salaries exceeding 4 thousand euro (so called ‘solidarity tax’). Perhaps, this is a wise political ploy, which poor electorate would like, but it can be hardly called a farsighted economical solution from the point of view of attraction of high – skilled professionals of the European level to Latvia.