The Latvian Government plans to impose a new real-estate tax on private dwelling space next year, with the aim of raising an additional 24 million lats ( € 34.15m) annually to the state’s almost depleted coffers.

The Finance Ministry’s new real-estate tax plan proposes an annual rate from 1% to 3% depending on the size of the living area. According to the Finance Ministry, the law is designed to protect poor people living in small apartments. Therefore apartments with less than 40sqm of dwelling space will be exempt.

Though analysts say the move makes sense, some believe the Government’s decision comes three years too late. Back then, the economy was booming with average gross domestic product (GDP) growing in double digits annually. Since then Latvia’s real-estate and credit bubbles have burst and GDP growth fell -18% in Q1 2009, prompting both the central bank and the Finance Ministry to revise their forecasts this year to -16.5% and -16% respectively to -18%