Farmers are dissatisfied with the planned increase in real estate tax

The Association "Farmers' Council" is outraged by the decision of the Ministry of Finance and Justice to increase the Real Estate Tax (RST) for agricultural land starting in 2016. Despite the suggestions of farmers and the Ministry of Agriculture and their participation in several meetings to review the decision, the proposed proposals have not been taken into account so far. The Association warns that as RST continues to grow rapidly, a new economic burden will be imposed on farmers, which will hinder the development of Latvian agriculture.

Juris Lazdiņš, Chairman of the Board of the Farmers' Parliament, comments that the application of such a tax is not appropriate for the current economic situation of the country.
"Currently, it is planned to bring the tax closer to 48 euros per hectare by 2017. Such a tax increase does not correspond to the country's current economic growth. Consequently, a further increase in the tax is unacceptable. In the past five years, namely 2010-2015, the NIS has increased by ~ 300%, and an even further increase may have a negative impact on Latvian agriculture. We are surprised by the argument that the NIS payment could be made from direct payments intended for farmers. In Latvia, this rate is still the lowest in the entire EU, and in addition, direct payments have a completely different goal and task, namely strengthening competitiveness."

Some of the proposals offered by the ZSA to the Minister of Agriculture to resolve the situation:
• Separate agricultural land from other land and determine that the cadastral value of agricultural land is calculated by assessing the average market value over the last five years, thus providing farmers with the opportunity to forecast and plan production costs over a longer period of time.

• From 2016, limit the increase in real estate tax in regulatory enactments by stipulating that the increase in real estate tax in the following year may not be greater than 101% of the previous year.

The association "Farmers' Council" receives requests from agricultural producers every year to address the rapid increase in the tax burden on agricultural land, which is caused by the increase in cadastral values and thus also the increase in NIP. The tax increase is not predictable in the medium and long term, which significantly complicates the work of farms and does not contribute to the development and competitiveness of the farm.