Taxi business still suspects a large part of the “gray economy” / Article / LSM.lv

For several years now, attempts have been made to settle the unclear management of the taxi business, but still unsuccessfully. One of the mechanisms that has been in place since last year is the advance payment of social security contributions of 130 euros per month for each taxi. However, as a result, total contributions did not increase but decreased.

Taxi driver Andris said that the situation improved slightly after the Covid-19 crisis, but “nothing much, because there are still few tourists”. He admitted that he had no downtime allowance, but that the leave was at his own expense.

The work of Riga taxis is slowly returning to the usual tracks, admits the drivers encountered by LTV. However, both tourism and corporate interruptions due to the pandemic around the world have also affected the work of taxi drivers and, consequently, their pay.

Since the introduction of advance payment of social security contributions in the taxi sector – 130 euros per taxi per month – the number of taxis that pay taxes in the micro-enterprise mode has increased.

“I have a reasonable suspicion that not everyone will pay at least this 130 euros. There are people who use this event, ”said Kaspars Muižnieks, Chairman of the Board of JSC“ Rīgas taksometru parks ”.

The manager of the company “Rīgas taksometru parks”, which has been operating in Latvia since 1948, admits that the micro-enterprise regime is not suitable for everyone. This does not apply to companies with an annual turnover of more than 40,000.

For years, this business has been suspected of dishonest management according to the laws of the shadow economy.

“There are not only one fraudster working in the industry, there are also normal people, normal entrepreneurs. The basic problem is that there must be a proportionality of taxes with income. And unfortunately no one wants to do that, ”said Muižnieks.

Knowing that taxi drivers do not always present their true income, the relevant regulations of the Cabinet of Ministers have been amended several times. Thanks to these changes, the average salary of a taxi driver has now risen, but is still strikingly lower than in other sectors.

The average salary of a taxi driver in 2016 was 108 euros and for the next three years – 140, 204 and 264 euros, respectively, which is much lower than the average indicator of all sectors in the country.

The number of micro-enterprise taxpayers has almost doubled in the last five years. At the same time, the number of value added tax payers has decreased.

This only confirms once again that entrepreneurs in the taxi sector are also trying to find a way to reduce tax payments, according to an information report of the Ministry of Welfare.

“And then the question is, why is there such a shadow economy and why are entrepreneurs or taxi drivers hiding?” asks the landlord.

Obviously, the attempt to impose social security contributions on all cars carrying passengers has not solved this fundamental problem of the shadow economy.

Although the number of taxis for which the 130 euro tax paid goes to the social budget has increased, the total amount paid has decreased, and not increased as planned.

In 2017, 2.5 million euros were paid to the state in social contributions, but in 2019 – almost 2.38 million euros.

“We need to come up with a common, understandable financial solution for all parties. It has to be done. Because if this is not achieved, Latvia could be one of the first European Union countries where the taxi industry will be completely destroyed. Either it will be in the gray area, ”says Muižnieks.

The company, which currently has 40 drivers behind the wheel of 20 taxis, says only ambitious tax reforms can save the industry. According to him, this could be, for example, equating taxis with public transport by applying a reduced VAT rate.

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