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After a meeting with coalition partners, Prime Minister Krišjānis Kariņš (JV) said that discussions on improvements in the tax system would continue.
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“There are still some things to discuss. As a result of any change, the situation for families with children cannot get worse – we have several ways to achieve this, maybe consider other rules for family state benefits. We will also consider whether we can further relieve low wages,” said Kariņš. , adding that tax redistribution models are currently being discussed
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Saeima deputy Ilze Indriksone (VL-TB / LNNK) revealed that the national association cannot support the MoF’s offer for tax reform for the time being, as it expects that the issue of support for families with children will be addressed. The plan to reorganize the royalty regime is also a matter of concern.
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The leader of the new conservative party (JKP), the Minister of Justice Jānis Bordāns, said that the JKP does not support the tax reform proposal developed by the Ministry of Finance, because “taxes must not be raised in conditions of recession”. He stressed that tax policy must be addressed in a complex way. “We must not pull out one tax that can finance one sector – it is not tax reform,” the minister said.
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Referring to what Bordāns said, Atis Zakatistovs, the chairman of the Saeima faction of “KPV LV”, the parliamentary secretary of the Ministry of Finance, pointed out that it is important that the priorities are not contradictory. If someone prioritises raising salaries, raising the non-taxable minimum and lowering taxes in the revenue section, this is a contradiction that may not be resolved, the politician of KPV LV pointed out.
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It was previously predicted that the government could see the FM report tomorrow, August 18.
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As reported, the Ministry of Finance proposes to introduce tax changes in three stages, initially marking the compulsory health insurance contribution by five percentage points, without increasing the total labor tax burden, but redistributing the rates of compulsory state social insurance contributions, personal income tax and solidarity tax. As a result of the total changes in the tax measures, the fiscal impact on the general government budget is plus 66.2 million euros in 2021.
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Several coalition partners have indicated that the change proposal will still need to be modified. Krišjānis Feldmans, a member of the JKP board and a member of the Saeima, has announced that this proposal for tax reform is catastrophic. In his view, it is unacceptable that “at least five different taxes are raised”. The politician also pointed out that it was not clear why the taxes chosen by the Ministry of Finance should be raised. Feldmans also points out that the offer does not address real estate tax at all.
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Kārlis Vilerts, an economist at the Bank of Latvia, pointed out to LETA, among other things, that in the proposed directions of tax policy development to promote the sustainability of state social and health insurance, the tax burden on employed persons will increase.
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The Ministry of Finance points out in this regard that tax policy instruments cannot solve the situation of workers with dependents, therefore the calculated impact on families with children must be addressed by purposefully planning the family state benefit policy.
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