Financial Services, Latvia, Medicine, Taxation

International Internet Magazine. Baltic States news & analytics Monday, 22.07.2019, 19:34

Vinkele determined to scrap two-basket healthcare system even without tax changes

BC, Riga, 19.02.2019.Print version
Health Minister Ilze Vinkele (For Development/For) is determined to scrap the two-basket system in healthcare even without changes in current tax regimes, the minister told journalists LETA/BNS.

The two-basket system where socially insured patients are entitled to the full range of government-funded healthcare services, while the socially uninsured can only receive the basic services, is “already just a fiction”, Vinkele said, adding that the two-basket system only “upholds an illusion about things that do not exist in reality”.

At present, one percentage point from social security contributions that are paid for employees working under the general tax regime goes to health insurance, and the health minister wants this approach to be applied also to all other tax regimes.

Vinkele also believes that smaller but substantial improvements can be made without changing the tax system as a whole, namely, by switching back to a single basket healthcare system.

One percentage point of the social security contributions would then be the price of health insurance. “In my view, this is a more progressive approach, because a fixed charge is a regressive instrument. For a low-income person, EUR 250 is regressive relative to someone with high income,” the health minister said.

As reported, the Health Ministry’s proposal to amend the Healthcare Financing Law is causing the government to take a broad look at the tax system and consider tax changes already before 2021, Prime Minister Krisjanis Karins (New Unity) said at today’s Cabinet meeting.

After hearing the Health Ministry’s report on the amendments necessary to the Healthcare Financing Law, Finance Minister Janis Reirs (New Unity) pointed to the problem that the health system is currently financed by around 600,000 taxpayers although Latvia’s employed population is about one million strong. The finance minister believes that the situation might be solved by reducing the number of various tax regimes. There are currently seven tax regimes in Latvia.

Health Minister Ilze Vinkele (For Development/For) agreed that the Health Ministry’s proposals would affect a “broader area” than just the health sector and that the seven taxation regimes should be revised.

Interior Minister Sandis Girgens (KPV LV) called on the ministers to start considering a tax regime that would encourage people to pay their taxes. “A tax rate that does not encourage to pay the tax should be scrapped,” the minister said.

On hearing the ministers’ arguments, Prime Minister Karins indicated that the many taxation regimes are not advantageous in the long term as they prevent the taxpayers from ensuring their future.

“It would be irresponsible to consider the Health Ministry’s proposal without changing the system as a whole. We will therefore have to decide on changes in the taxation system. Perhaps, this has to be dome even before 2021. But if we want to change something, the decisions have to be farsighted,” the prime minister said.

Karins said that the taxation system has to be fair and equitable and that the government must not allow its deterioration.

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