Residents have also said their financial situation has worsened significantly this year, according to information from Swedbank.
Compared with the last three years, residents have become more optimistic about their financial situation in 2016. 22% of respondents said last year their financial situation was positive. This year, the proportion of residents that think that has reached 30%. 37% of respondents have noted that the financial situation in their household has not change much over the course of the year. 29% of respondents are optimistic towards 2017.
Events that have affected the financial situation of Latvian households in a positive manner
One-fifth of respondents mentioned getting a pay rise. 15% mentioned having found opportunities to make money on the side. Compared with the average gross wages and salaries in 2015 (EUR 809), wages have grown by 3.8% this year. Residents’ purchasing power has grown more rapidly than wages – average net wages have only grown by 3.4%, whereas consumer prices have not changed much. With that, residents’ actual income has grown this year. Heating service tariff decline (12%) and rise of benefits for dependents (10%) are viewed in positive light. Other positive developments mentioned by residents in a positive manner include repayment of loans (9%), finding work (9%), increase of minimal wages from EUR 360 to EUR 370 (8%) and low interest rates (6%).
Events that have affected the financial situation of Latvian households in a negative manner
Nearly half of residents mentioned inflation – price rise of goods and services. 41% of interviewed households say their financial situation was negatively affected by unplanned expenses. The third most often mentioned negative reason was the increased building maintenance fee (associated with VAT application to apartment houses).
Other negative reasons that have had an impact on households’ financial situation this year include sicknesses, traumas or injuries (21%), heating tariff rise (17%) and loan burden (17%), wage decrease (10%) and job loss (7%).
Predicting expenditure positions that could rise in 2017, half of residents mentioned housing fees (including utility fees and housing-related taxes), food (41%), health (37%) and electrical energy (37%). Also residents see potential for rise of transport-related expenses (24%), purchases of clothes and footwear (18%), leisure and cultural events (12%) and education-related expenses (9%). Looking at expected changes that will affect Latvian households next year, Swedbank mentions minimal wage rise by EUR 10 (from EUR 370 to EUR 380).
It is important for low income recipients to submit annual declaration next year and recover overpaid PIT, which formed as a result of differentiated non-taxable minimum. Overpayment of differentiated untaxed minimum will not generate on accounts of residents whose wage ‘on paper’ reaches EUR 1,100 or more in 2017. These residents will have to deal with monthly income decrease of EUR 3.45 with lower non-taxable minimum of EUR 60.
Maximum possible non-taxable minimum will be EUR 115 a month for employed people with wages up to EUR 400 on paper in 2017. Part of it (EUR 60) will be applied every month, and the remaining (EUR 55) will be allowed to be recovered as overpaid tax by submitting a declaration in 2018.
State family benefits for families paid for the fourth child and every other child will be increased from EUR 34.14 to EUR 50.07. Separate benefits will also grow. For example, 1 April will mark the introduction of doubled minimal survivor’s pension of EUR 92.50 (for children under the age of seven) and up to EUR 111 (for children older than seven).