Financial Services, Latvia, Taxation

Reirs points out that during the work on the new government declaration, there was a lot of talk about tax changes, especially labor taxes, in order to achieve that low income-earners be paid higher net wages. It means that the non-taxable minimum income must be increased faster, but no later than in 2019, explains the minister.

The current tax system has to keep working for some time so it could be analyzed in 2020, says Reirs. Before that, only those taxes that do not concern entrepreneurship could change. For instance, higher non-taxable minimum income would mean no extra spending for businessmen, therefore the non-taxable income could be increased sooner, says Reirs, adding that the agreement not to increase the minimum wage in the near future is still in force.

Every time tax changes are discussed, the public will be provided full information about the discussions and all reasons for raising one tax or another, Reirs promises. "For instance, a political decision has been made in our neighbor countries to raise excise taxes on alcoholic beverages, fuel and cigarettes, and use the higher revenue to substantially increase child benefits."

Another problem that needs to be solved is social support for those on paternal leave, as these persons do not make social contributions, which will affect the amount of their pensions when they retire, adds Reirs.

Commenting on when the minimum pension could increase, Reirs points out that this is a very complicated question. The minimum social insurance benefit is EUR 64.08, and it is at the basis of everything - pensions, disability benefits and others. In order to increase the minimum social insurance benefit, and therefore pensions, by EUR 10, a total of EUR 64 mln would be needed, which is an enormous amount. The minimum social insurance benefit has to be reformed by introducing a more individual approach to all those who receive the benefit, believes the minister.