Direct Speech, Economics, Financial Services, Labour-market, Latvia, Law and Regulations, Markets and Companies, Taxation

She quoted the media reports about the government having in mind "certain reserves regarding changes in consumption taxes" and hinting that "most probably everyone will have to come out of their comfort zone".

"Hereby I make a public announcement that I, as the owner of a small enterprise, have no reserves for potential tax increases and therefore I urge the politicians to come out of their comfort zone first," Pastare said, adding that her company was already notifying its customers about price increases and the staff about wage cuts, starting from January 1, 2017.

"Starting from 2017, a huge tax pit awaits us because of introduction of minimum social insurance contributions for employees which will mean a rise in labor costs as opposed to the objective of reducing labor costs included in the government declaration," the financial expert said.

She pointed out that, while the tax to micro-enterprises which had been in business for three or more years will be reduced by one percent next year, the companies will have to start paying a minimum social insurance contribution at EUR 97.16 per employee monthly which would lead to a rise in labor costs.

Also, employees will have to wait for a year-and-a-half to get their gain from the differentiated minimum non-taxable income, EUR 17.25 monthly, as a refund of personal income tax conditional on filing the annual tax return. It means their wages will actually decrease and we will all be lending money to the government for an indefinite period of time, the financial expert said.

She believes there will be no shifting of tax burden to consumption taxes in the future, only actual increase of all kinds of taxes. We might see a slight short-term increase in tax revenues in 2017 as a number of companies will take time adjusting to the new circumstances but, without a long-term tax policy aimed at improving business environment and supporting entrepreneurship, the situation will become even worse in a year or two, especially considering uncertainty about availability of the EU funds after 2020, Pastare warned.

"If the tax hikes are not stopped immediately, I call on financial and tax advisors, accountants and other financial and economic experts by way of protest to waive their fee for the initial consultation to businesses about optimization options, of course, strictly in compliance with the law but making use of the loopholes which might have been left in the legislation on the purpose," the financial expert said.