As annual inflation continues to set new records, businesses are forced to adapt to new challenges, including higher production costs and higher wage labor demands to cover increased spending. Not everyone is able to cope with the difficult situation, so some entrepreneurs would appreciate the facilitation of business. The overwhelming majority, or 76.3%, of businessmen surveyed believe that reducing the impact of inflation would help them more effectively by reducing taxes on labor. This is evidenced by the results of a survey conducted by Jumis Pro, the developer of the Jumis business management and accounting system.
In July 2022, compared to the seventh month of last year, the average level of consumer prices increased by 21.5%, according to data from the Central Statistics Office (CSB). This indicator is the highest recorded by CSB data on consumer price changes in Latvia since 1998. Furthermore, price increases have been ongoing for at least seven years. Compared to 2015, consumer prices in July 2022 increased by 36.4% – for goods they increased by 39.1% and for services – by 27.3%.
Under such circumstances, many entrepreneurs are no longer able to cope with rising costs on their own. The business survey crystallized the view that reducing taxes on labor would help more to mitigate the impact of inflation. This would make it possible to pay higher wages to employees and improve competitiveness in the global market, where a large number of companies are currently facing similar challenges.
38.8% of respondents tend to think that the most useful would be direct financial support to cover the rising costs. 27.3% would like a reduction in the VAT rate for strategically important product groups, while 21.9% would appreciate longer terms for paying taxes.
“General inflation and cost growth are the main obstacles to the smooth functioning of at least 77.8% of Latvian companies. This finding in our survey would not be wise to ignore, especially considering the forecasts that price increases will continue. This means that entrepreneurs themselves need to be prepared for quite radical decisions, such as restructuring working hours, moving to smaller workspaces, giving up their corporate headquarters or switching to remote work. other savings and cost reduction measures are worth thinking about, for example the choice of cloud services where the tariff can be flexibly changed depending on the amount of use. However, it cannot be excluded that all of the above will not be enough and support at the national level will be needed, “emphasizes the head of Jumis Pro. Viesturs Slaidins.
In the study conducted by Jumis Pro in the summer, 279 Latvian small, medium and large companies were surveyed. Each respondent can choose multiple answers.
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