Latvian FinMin: shadow economy would be curbed more efficiently if wages were not paid in cash

Shadow economy would be fought more efficiently if wages were not paid in cash, said Latvian Finance Minister Dana Reizniece-Ozola (Greens/Farmers), commenting on a proposal to restrict purchase of excise goods with cash, informs LETA.

MP Imants Paradnieks (National Alliance) has proposed a measure to fight shadow economy – restrict purchases of alcoholic beverages and cigarettes in cash. Paradnieks has asked the Finance Ministry to provide its opinion on the proposal and has asked for the opinion of a number of experts.

Reizniece-Ozola said that the ministry will review the proposal, but the minister herself is cautious about it, fearing a possible rise in sale of contraband products.

The minister believes that the proposal of commercial banks to introduce a requirement to pay wages to a bank account instead fo cash, is of a higher potential to fight shadow economy. “We will still discuss this proposal with social partners. In my opinion, it would curb shadow economy more efficiently instead of restrictions applying to a narrow group of products,” said the minister.

As reported, the share of shadow economy in Latvia last year reached 22% of the gross domestic product (GDP), which is by 1.3%age points higher than in 2016, according to study “Shadow Economy Index for the Baltic Countries 2009-2017”.

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