Even though tough talks and opposition against the so-called solidarity tax are expected, Latvian Prime Minister Laimdota Straujuma supports this initiative and does not want to back away from it, as reported by lsm.lv.
In an interview to Rīta panorama programme of LTV, Straujuma said she expects tough talk with social partnerss in regard to the solidarity tax, which provides for charging a social insurance fee from wages above EUR 4,000 to the social budget. She said she personally supports this initiative.
The PM was nonetheless surprised with the amount of money this initiative could potentially bring the budget. It is estimated that this tax will give Latvia’s social budget EUR 41 million in 2016. «It is an enormous amount,» – said Straujuma.
She also expects sharp discussions with social partners in regard to raising minimum wages and PIT. Straujuma believes discussions among ministers will be carried out without major conflicts.
In her interview, the Prime Minister avoided mentioning any exact numbers in the budget for 2016. She only noted that defence should have full funding, so that it is possible to achieve 1.4% of GDP for this sector.
BNN had previously reported that Latvian Chamber of Commerce and Industry voiced its protest against the adoption of a new labour tax, which has been called the solidarity social tax. LCCI believes it would completely contradict the government’s signed strategies and completely eradicates any desire to create jobs with high added value in Latvia and medium/high salaries.
It is currently not mandatory to pay social fees from monthly wages above EUR 4,000. However, the coalition’s agreement states that a new tax will be created – social solidarity tax. It will not be used to provide social insurance to protect workers. Instead, the money collected from this tax will end up in the general social budget. «Basically this means unjustified raising of labour tax and complete abandonment of everything that was accomplished during talks with the government and Finance Ministry. In the time when it is necessary to consider reducing labour tax in order to become more competitive, the government instead considers burdening the population with new taxes. This will do no more than chase entrepreneurs deeper into shadows,» – says LCCI Vice-President Lienite Caune.
If this solidarity tax is adopted, there will be no hope left to maintain professional workers and high-rank managers who honestly pay taxes in Latvia, LCCI says.