Tax Increase Could Make Recovery More Lop-Sided

The Latvian government has approved an increase in motor vehicles tax from January 2011, in a move it hopes will help raise LVL5mn for the national budget during the year. BMI?s major concern is that the tax increase could widen the gap between the small and premium car segments, given that it will be targeted at exclusive cars and those with large engines. Our second concern is in view of the fragile recovery in demand for new vehicles in the country.

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