OREANDA-NEWS. July 04, 2011. I see both – positive and negative aspects for Latvia in the financial perspective developed by the European Commission after 2013. The positive aspect – progress has been made to equalize the amount of direct payments for farmers. Currently, the Latvian farmers receive much lower subsidies than farmers in other EU Member States and the prepared proposal partially addresses this problem - the amount of direct payments received by Latvian farmers will increase by one third from 2014.

The European Commission’s proposal includes also negative changes for Latvia - the European Commission has returned to the idea proposed in the previous financial perspective to impose equal ceiling for all Member States for the funding they can receive from the European Union funds.

If during the previous discussion the agreement was reached that this ceiling is differentiated according to the economic situation of a Member State, setting a larger amount of funding available for economically less developed countries, particularly Latvia – 3.79% of GDP, then currently the proposal is to impose a ceiling in the amount of 2.5% for all countries. We will continue to work on this issue to ensure a more favourable solution for Latvia.

I would also like to note that no changes are expected in Latvia regarding the value added tax, although the negotiations are going on about the European Union budget funding. Currently, it is financed from the GNI or payment of the Member States, which is proportional to the total national income. The other source of funding is the own resource from the VAT, which is calculated on basis of the VAT collected in the Member State and by making various adjustments.

At present moment, the Commission proposes to increase the proportion of own resources from the VAT in the EU budget revenues and change the calculation procedure. This proposal still needs to be analyzed. In any case, this proposal will not have impact on the effective VAT rate in Latvia.

In my opinion, the situation in Greece will not impact the next financial perspective of the EU. Even more so because the Parliament of Greece has approved the austerity measures – both, the budget spending cuts and tax increase, as well as privatization package of Greek state-owned property in the amount of EUR 50 billion. Consequently, the European Union can make the first payments from the new loan package which amounts to EUR 110 billion, but it will be necessary to follow how Greece meets the conditions and how the decisions, which were made yesterday by the Greek Parliament, are being implemented.