RIGA — New value-added taxes on natural gas could mean that Latvians will be paying 30 percent more for heating this coming winter.

The government is still looking for ways to increase the budget and reduce costs so the country can survive and edge closer towards recovery and further away from default. The VAT on natural gas would increase from 10 to 21 percent, if the government has its way in the Saeima.

“Essentially, the new excise tax is madness, which undermine the whole heating industry. Natural gas prices increased steadily from April this year. The new excise duty due to increase in the heat will be a tragic turning point in the industry,” Guntars Kokorevičs of the Latvian District Heating Association said.

Members of the Saiema think that renewable energy is the key for the future.

“The argument as to why the natural gas excise tax remained only on heating, was that the heat is not an export product and has little influence on manufacturers. Still, this tax at the EU Directive should be introduced in 2014 year in order to facilitate the switch to renewable energy,” Saeima Economy commission member Dzintars Zaķis said.

Zaķis said that the tax would probably be brought in at the end of the year and that initially it would not be passed on to consumers. Until companies can calculate new tariffs, they will bear the brunt of the new tax, he said.

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