RIGA — Despite calls for further austerity from the International Monetary Fund, Latvia’s approved the elimination of the excise tax on natural gas for the next year.
The move is anticipated to cost the national government only 3 million to 5 million lats (€4.2 million to €7 million) in revenue. The bill easily passed the Latvian parliament with 84 votes in support and zero against. Saeima economic committee chair Armands Krauklis of the People’s Party told LETA newswire that the elimination of the tax will ease the impact of heating on consumers in Latvia’s troubled economy, which is rife with unemployment and shell-shocked by the economic crisis.
Whether it results in lower prices for this coming winter remains unclear, though, as negotiations on Latvia’s natural gas supply for the winter are still on-going. Krauklis said he expects the elimination of the tax to improve Latvia’s hand in negotiating prices for natural gas with Russia’s Gazprom.
Despite the widespread support in the parliament, the Latvian government is expressing trepidation about the bill would motivate Gazprom to lower its prices.
Gunta Pužule, the head of the finance ministry’s excise department told business newspaper Diena Bizness that “it is unacceptable that a foreign country affected Latvian tax policy.”
Meanwhile Prime Minister Valdis Dombrovskis told the television program “900 Seconds” on Wednesday morning that the government will not support lowering taxes or introducing a progressive income tax system.
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