Latvia’s tax revenue continued to grow in the first quarter of 2026, but again fell short of the official plan. The result points less to an immediate fiscal shock than to a recurring gap between budget assumptions and actual tax collection.
The issue is not that Latvia’s tax base stopped growing. It has not. The issue is that nominal growth is still not enough to meet the revenue path built into the budget. For fiscal analysis, this makes the gap against plan more important than the year-on-year increase.
Data card
Latvia budget, Q1 2026
Tax revenue: €3.5bn
Tax revenue growth: +6.5% y/y
Tax revenue plan execution: 98.7%
Shortfall vs plan: €49.6mn
PIT revenue: €623.7mn
PIT plan execution: 91.4%
PIT refunds: €146.3mn
Social contributions: €1.2bn
Social contributions growth: +6.9% y/y
Social contributions plan execution: 99.4%
VAT revenue: €981.2mn
VAT growth: +7.4% y/y
VAT plan execution: 100.8%
Excise tax revenue: €312.7mn
Excise tax growth: +9.4% y/y
Excise tax plan execution: 98.0%
Total general budget revenue: €4.8bn
Total revenue growth: +18.1% y/y
Foreign financial assistance increase: +€492mn y/y
General budget balance: +€6.5mn
General budget balance, Q1 2025: -€521.2mn
Total general budget expenditure: €4.8bn
Expenditure growth: +4.5% y/y
State basic budget capital expenditure: €410mn
Capital expenditure growth: +65.3% y/y
Defence capital expenditure increase: +€174.8mn y/y
State special budget surplus: €146.3mn
Municipal budget surplus: €113.7mn
General government deficit, 2025: 2.5% of GDP
FM forecast deficit, 2026: 3.0% of GDP
Latvia’s first-quarter budget data show a familiar fiscal pattern: tax revenue is still growing in nominal terms, but the official revenue plan again proved harder to meet. The headline budget balance looks considerably better than a year earlier, yet this improvement was driven mainly by EU fund inflows rather than by domestic tax overperformance.
This matters because Latvia is entering a period of structurally higher expenditure pressure, especially in defence, infrastructure and social spending. In that context, even a relatively small quarterly tax shortfall is not just a technical deviation. It is a signal that budget planning may continue to rely on revenue assumptions that the economy does not consistently deliver.
The main fiscal question, therefore, is not whether Latvia’s tax revenue is rising. It is. The question is whether it is rising fast enough, and predictably enough, to support the spending path already built into the budget.
Data basis: Latvia Ministry of Finance release on consolidated budget revenue and expenditure for Q1 2026; State Revenue Service data cited by the Ministry of Finance; Treasury data cited by the Ministry of Finance; Eurostat general government deficit data published on 22 April 2026.
Comparison method: Year-on-year comparison for Q1 2026 against Q1 2025; budget plan execution as reported by the Ministry of Finance.
Interpretation: Structural reading based on the gap between nominal tax revenue growth, quarterly plan execution and the role of EU fund inflows in the general budget balance.