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Sunday 04.12.2016 | Name days: Baiba, Barba, Barbara
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Economic Diary of Latvia. Our people – we can find common ground. Or can we?

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUThis week the Latvian government mused ideas for new tax initiatives. No actual progress has been made so far, but, considering certain circumstances, it is not what matters the most.

Latvia’s Economy Ministry has submitted to the government a draft of rules for the adoption of a new fee in order to motivate businessmen to pay more attention to matters of energy efficiency.

The ministry proposes adopting an energy efficiency fee worth 7% of electrical energy consumed for the previous calendar month calculated per each MWh of consumed electricity.

According to the plans of the economic institution, payment of this fee will help reduce the imbalance between businessmen who employ energy audit measures or other kinds of energy management systems and those who do not.

This fee should be considered an instrument to control the energy management system in the realization of energy efficiency means to help achieve the goal set by the government – save 9,896 GWh of energy in end consumer sectors by 2020, as noted by the ministry. This fee would be applied to businessmen whose companies consume a lot of electrical energy (more than 500 MWh per year) if there is no way for them to adopt an energy audit or energy management system on their own.

According to initial estimates, revenue from this fee could reach approximately EUR 553,000 in 2017, EUR 2.52 million in 2018 and nearly EUR 1.45 million in 2019.

Politicians had previously demonstrated their ability to think outside the box and application of fiscal instruments by adopting the Solidarity Tax. The fate of this particular tax turned out comical and tragic at the same time. First it turned out that the number of payers of this tax had declined by 20 or 30 percent from the number mentioned in official documents (which is something that should have been expected, because people who receive wages of more than EUR 4,000 per month, who were the target audience of this tax, work in large and respective companies that usually have a team of professional tax consultants and lawyers, who also earn a lot not just for having pretty eyes, but rather for their knowledge and ability to make sure the ‘right’ money is not subjected to taxes without breaching any laws in the process). Later on, businessmen decided to challenge the adoption of this tax in the Constitutional Court. After that, Finance Minister Dana Reizniece-Ozola admitted that the adoption of this tax reduced the trust of entrepreneurs toward the state. Nevertheless, the head of the ministry noted that the idea of this tax is correct – the form and execution, on the other hand, is flawed. The minister believes there is no need to cancel the tax. She proposes changing it into a social tax to make sure those who pay it also receive some benefits.

The constitutional court will decide on whether or not to accept the plea on 28 July.

Holy place does not remain empty for long

There are still more questions than answers in the matter of leadership for the State Revenue Service. Inga Kolegova, Director of the State Environmental Service, remains the only candidate to lead SRS. Kolegova refuses to comment this information, as she is currently on vacation.

Previously Prime Minister Maris Kucinskis met with the head of the State Treasury Kaspars Abolins, who was considered a candidate for the aforementioned post for a time. Abolins, however, refused to become a candidate.

Finance Minister Dana Reizniece-Ozola does seem to have other candidates, but their names are not revealed at this time. According to the information that was leaked to the press, it is known that aside from Kolegova and Abolins the offer to lead SRS was also offered to the Director of the Consumer Rights Protection Centre Baiba Vitolina.

The story about finding a replacement for Inara Petersone is similar to the situation following Laimdota Straujuma’s decision to step down. As we all remember, the search for the new head of the government cost President Raimonds Vejonis’ health a lot: the president was hospitalized the day after the announcement of Maris Kucinskis’ name.

The lack of appropriate candidates for big posts in state administration means the queue is nearly empty. And this is a very, very bad sign. It means the country has a lack of labour force and the elite. Elite in this case does not mean incredibly wealthy people who can afford expensive cars and yachts. In this case it means people with good education, plenty of experience, skills, broad thinking and capability to lead the small ship called Latvia through all geopolitical and economic storms safely.

The ‘right’ people

In the context of deficit of capable professionals, it is worth mentioning the discussion organized by Neatkarīgā with representatives of New Latvians association, which unites recipients of residence permits.

The newspaper prepared an article based on results of the discussion. Here are some excerpts from the article.

‘The most important part of society is being washed away from Latvia. Professionals leave for countries where they are in demand. But it was not easy for anyone who has relocated to Latvia for life to rise above the middle class. We managed largely thanks to our professional skills and education. We have our own human capital. I believe such a group of professionals loyal to Latvia could prove useful. We have homes and funds. We are not focused on survival. With that, we can offer a lot,’ – said psychologist Maria Shumihina.

Sociologist Irina Krilova noted that demographically useful residents are travelling to Latvia. They are interested in helping Latvia become stable and developing Latvia. «They are prepared to invest their own human resources. It is their main capital at the moment,» – she noted.

«The people who travel to Latvia as part of the residence permit programme travel here to create. Not to make money and receive the biggest cuts – Russia is a better destination for that. There are more problems in that country. Therefore – there are more opportunities for such a business. In Latvia, on the other hand, it is possible to create businesses that benefit society, the state and infrastructure,» – added entrepreneur Pavel Pereverzev.

When asked if those people intend to integrate in Latvia’s environment, Krilova responded by saying that it was the initial goal: people part of the residence permit system actively study the language and culture.

This does sound like a utopia, but in conditions of chronic deficit of skilled workers and elite this group of New Latvians may take the free space in the country. In the political and economic context, as well as the migration crisis in Europe, the government should think not of ways to increase taxes or create new ones, but rather that the education and healthcare sectors gradually become critically important for the economy and the country’s survival. Latvia desperately needs healthy and educated people. Latvia’s own people.

Ref: 017.109.109.6799


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