RIGA, Feb. 12 (Xinhua) -- The Latvian Finance Ministry has started work on a revision of the Baltic country's tax system, as calls are being made to cut value added tax (VAT) on a number of product groups, local media reported on Wednesday.
Finance Minister Janis Reirs, who is rather skeptical about the proposed tax cuts, said on public television that for the time being the calls for VAT reductions should be regarded as some kind of a wish list, but that the proposals have yet to be debated in the government and parliament.
Citing the analysis of Latvian central bank, the minister indicated that VAT cuts do not really help reduce poverty.
The proposals submitted for the tax measures, which would be effective from 2021 to 2025, include lowering the VAT rate on medicines, several food products, restaurants and newspapers.
According to the proposals submitted so far, the 21 percent VAT rate on restaurants should be slashed to 12 percent, while VAT on food products like fresh meat and fish, bread and grain products, milk, dairy products and eggs should be cut from 21 percent to 5 percent.
It has also been proposed to reduce the VAT rate on medicines from 12 percent to 5 percent.
