Budget, Financial Services, Latvia

Valdis Dombrovskis and Valdis Zatlers.

The government will have an emergency meeting tomorrow, November 20, to consider further steps for reducing budget deficit in line with the international lenders' demands that the budget deficit be reduced by another LVL 55 million, writes LETA.

The government will also have to review a large number of bills accompanying the 2010 state budget law.

The government meeting will start right after a ruling coalition parties' meeting at 2:30 p.m.

As reported, along with curbing state budget expenditures, the government is also considering increasing the previously agreed tax burden, for example, raising the tax on capital gains from 10 to 15% and giving up the education and healthcare rebates, according to documents in LETA's disposition.

Another proposal is to raise the residents' income tax to 26%, or by one percentage point higher than before, as well as to lower tax allowances for dependant persons from LVL 63 to LVL 50 per month.

It has been proposed to lower the tax rebate for donations made to charity organizations from 85% to 25% as well.

The suggested plan for the introduction of the progressive tax on real estate foresees 0.1% tax on property with up to LVL 40,000 assessed value; 0.2% on property with LVL 40,001-75,000 assessed value and 0.3% tax on property with over LVL 75,000 assessed value.

Another proposal has been to introduce a tax on natural gas.

As already reported, Dombrovskis told reporters following the ruling coalition meeting on Monday that national budget expenditures for 2010 must be cut an additional LVL 55-60 million.