According to Masiulis, once the standard 21-percent VAT rate is applied starting 2015, people’s expenditure will grow by around 11-12 percent.
Masiulis says that residents of blocks of flats with low or medium income will struggle most because of district heating and no opportunity to choose other heating providers. In addition, the politician says that not only more money will be spent in compensations for heating, but also the number of socially disadvantaged people might grow.
The Law on Value Added Tax stipulates that the reduced 9-percent VAT rate on heating and hot water is in force until 31 December 2014. The Cabinet recently decided to scrap the exemption.