Valka’s Tax Dilemma: A Border Divides Revenue and Residents
The Latvian city of Valka is pushing for a cross-border deal to recover lost tax revenue. Around a thousand Latvian citizens live in the Estonian half of Valga, paying taxes there instead of to Latvia. Mayor Rudolph Schiller claims these residents spend most of their lives in Latvia despite holding Estonian permits.
The border between Estonia and Latvia splits the twin city of Valka-Valga in two. Latvian Valka and Estonian Valga share streets, services, and even families—but not tax revenue. Roughly a thousand Latvian nationals reside on the Estonian side, directing their 'Turbo Tax' payments to Estonia’s budget.
The dispute highlights the practical challenges of a divided city. Valka continues to lose funding as residents pay their 'Turbo Tax' across the border. For now, no solution is in sight, leaving the municipality to address its budget shortfall alone.
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