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Ceturtdiena 09.04.2020 | Name days: Valērija, Žubīte
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Swedbank: 27% of Latvian residents believe they are aware of tax benefits

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Swedbank, taxes, changes, surveyOnly every fourth Latvian resident believes they are fully aware of taxes and benefits applied to their wage, according to results of a study performed by Swedbank Institute of Finances.

Participants of the survey mainly pointed to the difficulties associated with the nuances of the labour force tax system, the need to simplify it at make it socially fairer. Residents expect tax changes, stressing the need to fix the mistakes of the current policy, Swedbank concluded.

58% of respondents believe they are only partially informed of the taxes and benefits applied to their wages. Only 27% of working Latvian residents are fully aware of all taxes and benefits.

Most often this position is voiced by residents whose income reaches EUR 1 000, those in managing positions and businessmen. 16% of respondents say they are completely unaware of the tax system. Nearly one-third of them are younger than 30 years. Residents explain the shortage of knowledge with the complexity of the labour force tax system, which prevents persons without specific financial knowledge from successfully navigating it, the survey found.

The survey also reveals a shortage of residents’ interest for the process of the labour force tax creation. Only 14% of residents look up political discussions in relation to expected changes. In most cases residents only start paying attention when one of the aspects of change is worth attention. The most amount of interest is expressed by businessmen and heads of businesses, specialists, office workers and self-employed persons.

«According to data of this survey, Latvian residents general do not carefully follow labour force tax change plans. This can be explained with the difficulty of the system, the further complexity of which was experienced in the previous tax reform,» comments Swedbank Institute of Finances expert Evija Kropa.

«However, more active involvement of society and initiatives would help improve the comprehensive dialogue during tax reviews. The government declaration mentions activities that affect labour force taxes, including the simplification of labour force tax system. On the one hand we can see residents find it difficult to navigate the labour force tax system, and on the other hand – there is a shortage of interest for the tax policy when they it is discussed and the decision-making process can be influenced,» Kropa concludes.

48% of low-qualified workers support a full replacement of the labour force tax system. The same can be said for the people whose income does not exceed EUR 700. Those whose income exceeds EUR 700 expect improvements for the established order. Only 5% of survey respondents believe it is not necessary to change the current conditions to avoid unnecessary changes and unclear consequences, according to results of the survey.

Read also: Prime Minister: Finance Ministry may unveil an offer for tax change in February

«A possible discussion of the possible labour force tax policy in Latvia remains topical. Although it may seem residents are tired from often and major changes to this field, 82% of respondents believe changes for the labour force tax are necessary. Most often supporters of change prefer fixing mistakes of the currently policy, and yet there are also many who believe changes should be serious and that the tax policy should be changed completely,» Kropa concludes.


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