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Tuesday 22.08.2017 | Name days: Rudīte, Everts
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Finance Minister criticizes entrepreneurs for resting in the 200 LVL comfort zone

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Andris Vilks

The Employers’ Confederation of Latvia (ECL) believes that the increase of minimum salaries will not yield the necessary effect in order to reduce social inequality. The confederation believes a more effective strategy would be to increase the tax-free allowance to the level of subsistence minimum. However, the Finance Ministry believes that it is impossible.

In hopes of reducing social inequality, the Finance and Welfare ministries offer to increase the minimum salary amount from 200 to 225 LVL (320 EUR) in 2014. The tax-free allowance- on the other hand, can be differentiated – retain the current amount of 45 LVL for large salaries, but increase that of small salaries from 84 to 120 EUR. It is also offered to increase the benefit amount for dependents to 98 LVL in 2014.

“This is a very significant change in the next year; it should be the main priority when compiling the 2014 budget. While our country’s economy was showing good macro-economic results after the overcoming of the crisis, reducing the budget deficit in the process, we have had little opportunity to help residents with low income and reduce social inequality,” – Finance Minister Andris Vilks says.

Vilks says these opportunities after the re-calculation of the fiscal volume – the amount the state budget can afford in 2014. The issue of increasing minimum salaries remains highly important, because it remained dormant for some time.

“We do see, however, that a notable number of working people receive no more than 200 LVL. This is, most likely, a good comfort level for entrepreneurs. It is clearly necessary to revise this relatively low number to the level of Estonia. This step being made also in order to reduce shadow economy in the country. The current situation in the economy is different than it was two or three years ago, and entrepreneurs can afford to increase minimum salaries,” – Vilks believes.

Chairwoman of ECL Liga Mengelsone emphasized that there will be discussions in regard to the minimum salaries on the National Trilaterial Cooperation Council with trade unions and employers.

“The problem is a to wide of a gap between people with low income and those with high income. If we want to resolve this problem and make sure people with minimum income receive more, the decision to increase only minimum salaries will not change a thing,” – Mengelsone believes.

ECL’s proposal is to go step by step, with the first one being the increase of tax-free allowance to the level of subsistence minimum (174 LVL in February, according to the Central Statistical Bureau of Latvia). Secondly, benefits for dependents should be increased as well, because numbers show that working families with children are at risk the most.

Vilks, on the other hand, believes the proposal of ECL is unrealistic. According to him, the ECL has not calculated how much it would cost the state budget to increase the tax-free minimum to the level of subsistence minimum.

“Where are we supposed to find this kind of money? The budget cannot handle this much,” – Vilks says.

Ref: 102.109.109.6726


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