Financial Services, Latvia, Taxation

The other four coalition parties point out that increasing the non-taxable minimum income to EUR 500 would require an additional EUR 120 mln next year, which would make it difficult to meet the other commitments, such as raising salaries for medical workers and teachers. Increasing the non-taxable minimum income was one of the goals listed in the New Conservative Party's election program, and because the non-taxable minimum has not been increased yet, opposition parties often blame the party for not keeping its promises to voters.

Finance Minister Janis Reirs (New Unity) said that work on the tax reform had been put on hold as new demands were being made. The higher non-taxable minimum income proposed by the New Conservative Party is not affordable at the moment as the state will be unable to finance healthcare without expanding the range of taxpayers in the country.

The Finance Ministry's Parliamentary Secretary Atis Zakatistovs (KPV LV) also said that the talks about tax changes had come to a halt because of the New Conservative Party's claim that the non-taxable minimum income be increased to EUR 500. "This is fiscally irresponsible. Wages are a bigger priority than increasing the non-taxable minimum," said Zakatistovs.

The New Conservative Party's member Gatis Eglitis agrees that increasing the non-taxable minimum income to EUR 500 will have a big impact on the state budget, however, people will have more money to spend as the labor tax burden will decrease, therefore the actual impact of a higher non-taxable minimum income will not amount to EUR 100 mln.

Prime Minister Krisjanis Karins (New Unity) declined to comment on the process of the talks on tax changes.