Search

The development of fiscal policy requires a regular assessment of the granted tax reliefs and exemptions and their compliance with the national targets and guidelines. Farmers in Latvia receive significantly more and larger tax allowances than representatives of other sectors, so this is a very important task also in the agricultural sector. The research aim is to assess tax reliefs, their dynamics and impact on the tax burden in agriculture in Latvia. The most essential tax allowance in Latvia is social support for the population; however, despite this, Latvia still has one of the highest income inequality rates in the EU Member States. It is necessary to continue the reduction of labour taxes, which is also very important in agriculture, in order to reduce the income inequality. In line with the country's move towards the "green deal" and an increasing use of more economical technologies in agriculture, it is recommended to improve the application of excise duty reliefs on diesel fuel. The tax exemption for subsidies needs to be assessed in detail, as the positive aspects of this relief have a number of negative ones, mainly income inequality related with the tax imposition and lower social guarantees for farmers. [ABSTRACT FROM AUTHOR]

No preferential tax regime for agriculture is imposed in Latvia. Farmers pay the same taxes as entities from other economic sectors; though, tax reliefs are applied to substantially reduce tax payments made by farmers to the budget. Therefore, the tax burden in agricultural sector is significantly lower than the general tax burden in Latvia. Nevertheless, it increases faster irrespective of many tax reliefs. The research aim is to study the dynamics and structure of tax payments in agriculture of Latvia to identify factors promoting the increase of tax burden. Result of the research concluded that the tax burden in agriculture grows at expense of production or production prime costs impacting taxes, while the capital tax burden decreases in the recent years. The planned inclusion of subsidies into the taxable income will increase budget revenues from capital taxes; thus, allowing to decrease labour taxes further leaving an impact on the prime cost of agricultural produce and enhancing the competitiveness of agricultural products produced by Latvia's farmers. [ABSTRACT FROM AUTHOR]