Value Added Tax

Conclusion
The main idea behind VAT is to stimulate manufacturing that lately is slowed down. Vat is not stimulating consumption. It is good for producers and businessman because they receive turnover money. They can spend more to progress and in the same time they bring more money to state’s budget. Consumer is loosing money to producers. VAT is not beneficial for service providers. If a lot of people are avoiding VAT payments, it signals that people are not satisfied with existing tax system. Their needs to be done changes but never all people will be satisfied. Government is representing stat’s societies beliefs. Maybe than there is no need for stricter punishments. Simpler solution is decrease of VAT. Overall we should not forget about benefits of VAT. The higher are taxes, the more people will try to find ways how to avoid paying them. More confusing will be the tax system, the more distinctions system will work. Higher VAT reduces economic competiveness, especially for Latvia between Lithuania and Estonia. VAT frauds are new and there needs to be done a lot to avoid them. This is the problem where EU and member states needs to put more attention and establish common preliminary ruling system which would not be miss interpreted. This problem is new and acts do not cover this problem fully. Good example where problems accrue is when earnings do exceed 30,000 Euros, than enroll for VAT register is mandatory. Latvia has to move up this 30,000 Euro level because this amount is too low. There are a lot of small businesses, which have small amount of turnover. “A lot of players in the game but a low volume of resources.” …