Financial Services, Foodstuff, Latvia, Legislation, Markets and Companies, Taxation

Unity Saeima group's deputy chairman and Agriculture Ministry's Parliamentary Secretary Edvards Smiltens told LETA that the group would discuss the matter and would also acquaint themselves with a study on application of reduced VAT to food, prepared by Latvia University of Agriculture members.

The Finance Ministry's opinion will also need to be heard, stressed Smiltens, adding that the Agriculture Ministry tended to support the proposal. Also, applying a reduced VAT to food product will support local producers, noted Smiltens.

Einars Cilinskis, head of the All For Latvia!-For Fatherland and Freedom/LNNK Saeima group, said that the initiative would have to be discussed and it could be one of the ways to reduce poverty. However, there are alternatives, for instance, raising the non-taxable minimum income, he added.

On the other hand, Vjaceslavs Dombrovskis, deputy chairman of the Reform Party's Saeima group, said that the Reform Party would most probably not support the initiative, and that there were other, better solutions to reduce the tax burden on the needy residents.

As reported, more than 10,300 signatures have been collected in favor of lowering VAT on food products. This means that the petition can now be submitted to Saeima.

The petition was posted on the public initiative platform www.manabalss.lv in August 2011. Its author, Normunds Grostins, explains that the majority of Latvian residents spend around one-third of their income on food, which is considerably more than in other European Union member state, and calls for a reduction in VAT on food.