Bri­vais vil­nis: grey econ­omy’s pres­ence in fish­ing in­dus­try may be 40%

Baltic News Network - - News -

The to­tal pro­por­tion of grey econ­omy in Latvia’s fish­ing in­dus­try may be around 40%, says fish pro­cess­ing com­pany Bri­vais vil­nis chair­man Arnolds Babris.

«I think its [grey econ­omy] pres­ence in the fish­ing in­dus­try is roughly the same as it is in the coun­try – around 40%,» said Babris. He ad­mits there are com­pa­nies in the in­dus­try who do not pay taxes in the full amount. Un­for­tu­nately, the process of push­ing such busi­nesses from the in­dus­try is not go­ing any­where. Tax avoid­ance pro­vides busi­nesses with greater ad­van­tages to re­duce self-cost, rather than im­prove­ment of ef­fi­ciency. It is the duty of state in­sti­tu­tions to pre­vent that, but there has not been a great amount of ac­tiv­ity so far.

Babris be­lieves grey econ­omy in the fish­ing in­dus­try may de­cline only if the gov­ern­ment de­cided to in­crease non-tax­able min­i­mum to EUR 500 in­stead of rais­ing min­i­mal wages, be­cause it would in­crease pro­duc­tion costs and producers would be forced to raise prices.

«I would rec­om­mend rais­ing non-tax­able min­i­mum to EUR 500 in­stead of min­i­mal wages. This would force many to exit the grey sec­tor, and more jobs would ap­pear in re­gions. And those EUR 500 would be spent in stores and returned to the state bud­get in the form of VAT. Ar­eas in de­pres­sion would liven up, and this would serve as a sign for in­vestors. The gap be­tween the poor and the wealthy would nar­row down. Em­ploy­ment rates among the poor would im­prove as well,» says the chair­man of Bri­vais vil­nis.

He says the tax re­form should fo­cus on re­duc­ing grey econ­omy. «SRS of­fi­cial said if SRS were to close to­day, hon­est tax­pay­ers would con­tinue pay­ing re­gard­less. The prob­lem is that those who nei­ther pay nor have any plans to start soon, and noth­ing is done about them. I sus­pect there is a sys­tem in place in ac­cor­dance with which of­fi­cials do ev­ery­thing to avoid tak­ing any mea­sures. We have to fight it and de­mand re­sults. Right now it seems the tax re­form is noth­ing more than a pop­ulist slo­gan, be­cause it does not solve the main prob­lem – the prob­lem with tax avoiders,» says Babris. He adds that it would be good to re­duce the num­ber of of­fi­cials in state ad­min­is­tra­tion three times to re­duce un­nec­es­sary bu­reau­cracy. Wages of the re­main­ing of­fi­cials should be in­creased to mo­ti­vate them to work and make them more com­pet­i­tive with pri­vate busi­nesses. It would also be a good idea to in­tro­duce per­sonal re­spon­si­bil­ity for of­fi­cials over con­se­quences.

Ieva Čīka/LETA

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