Latvia hope ‘unhealthy food tax’ will raise budget money

Latvia’s authorities are considering a variety of ways of increasing budget revenues. Some of them look rather odd. Various government ministries have proposed excise duties on unhealthy foods, alcoholic beverages and tobacco and a revision of taxes on motor fuel and natural resources. Latvia’s Health Ministry has come up with a long list of foodstuffs which, in its opinion should be taxed. On this “black list” one finds chocolate, confectioneries, cookies, biscuits, salt, margarine, and even animal fat. Also, the ministry would like the tax on alcohol and tobacco to go up. The Economics Ministry is for a rise in the tax on motor fuel, and the Environment Protection Ministry calls for a greater tax on the users of natural resources. “Taxes in Latvia are already the highest. True, excise duties on unhealthy foods may be a good idea, but on the condition taxes on essentials produced in Latvia go down. In that way it would be possible to compensate for price hikes to ensure the consumer does not feel the food basket has got more expensive,” parliamentary deputy speaker Andrei Klementiev told Itar-Tass. He recalled that the value added tax in Latvia was already one of the highest in the European Union. Last year’s VAT reduction from 22 percent to 21 percent in the final count yielded no benefits for the consumer and at the same time reduced the national budget’s revenues by 100 million dollars. “That’s absurd. In the same year we try to reduce the consumer tax only to begin to raise taxes on something else. This merely indicates Latvia does not have a tax policy at all. As soon as government ministers see a hole in the budget, they try to mend it. I believe this is a very shortsighted policy and society is unlikely to welcome it. The Latvian authorities are not campaigning for a healthy diet. Higher taxes for them are just another means of raising more money for the budget,” Klementiev said.