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Sunday 21.10.2018 | Name days: Severīns, Urzula

ECL General Director: mere waiting for economy to improve is foolish

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Employers’ Confederation of Latvia General Director Elīna Egle

Currently, there are two myths in the government, firstly, that taxes should be raised now, and, secondly, that the social justice has been achieved and is continuing to improve in the country, says the Employers’ Confederation of Latvia (ECL) General Director Elīna Egle in an interview to LTV1 broadcast Labrīt, Latvija!.

It is estimated that taxes must be increased now to comply with the fixed inflation frames before joining the eurozone; however, inflation is raised not only due to the state’s internal processes, Egle pointed out. She notes considering the consolidation processes, which many countries are now undergoing, there is little hope that we can maintain a low inflation rate.

The General Director considers that the myth of social justice, which is also generated in the media, is rather inaccurate, because if the income of families with two or three children is reassessed – it is very low.

Egle is also displeased with the political rhetoric that the period of structural reforms has ended. To her mind, just the fact that the government is unable to perform adequate consolidation this year, suggest that merely planning improvements in 2012 and waiting that the economy and companies themselves will pull through is very foolish.

As regards the tax policy, Egle believes that at the moment inhabitants already shoulder a large tax burden and have lost faith that the money paid in the social sector will be regained in the pension age. The lack of such guarantees propels shadow economy. Moreover, even if the value added tax raise by one or two percent could seem not a big deal; however, such tax policy indirectly affects many other sectors that are currently upholding the economy, for instance, the export, specifies Egle.

It is naive to believe that taxes, which are imposed on employees, do not affect employers as well. Similarly, the untaxed minimum increase is very small. It will improve neither the employer and employee’s relations, nor the total income, Egle asserts.

The General Director suggests that in order to achieve results, arguments relating to negotiations with the lenders should be thoroughly devised. There is no confidence that the currently planned measures will manage to restrict shadow economy.

When asked the question whether Estonia’s accession to the eurozone will benefit Latvia, Egle points out we could tell the investors – we are right here and will also introduce the euro soon. However, in view of the tax package changes before the new year, we can hardly expect gaining investors’ trust. This is a negative signal.

Presently, the biggest problem in the state is the disproportionate tax policy, which does not take into account the situation in enterprises. Egle is convinced the government is not seeking ways to create values, but only to reduce. Egle also notes the combat against shadow economy is insufficient to persuade entrepreneurs to work honestly.

Politics resides in another reality, disregarding the fact that 1 000 companies comprise 61% of the budget revenues, the General Director emphasizes.

She also hopes that discussions in Saeima will become more insightful, and that politicians will start analyzing and reviewing their declarations to remember what they have previously promised.

Also citizens have the right to express their attitude if the government fails to fulfil their promises.

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  1. Tim says:

    Agree- if nothing is done – there are no results whatsoever.

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