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Monday 16.07.2018 | Name days: Hermīne, Estere
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LCCI: government wishes to eradicate white economy

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RULatvian Chamber of Commerce and Industry is categorically against the adoption of a new labour tax, which has been called the solidarity social tax. LCCI believes it completely contradicts 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.

It is mentioned that this additional tax would bring the state budget an additional amount of EUR 40 million. However, LCCI had previously noted that, according to Finance Ministry’s estimates, a similar amount can be acquired by refusing tax benefits for non-working adults kept under family care. «There are close to 70,000 such people in Latvia. Some of them have long since moved to England and Ireland and have landed jobs there. Or they simply do not declare their income and receive envelope wages». It would be only honest to lift tax benefits for these people, said Caune, adding that it is entirely possible no one but state institutions will end up paying the social solidarity tax, because it lacks justification and people lack the motivation to pay such taxes. «The government promised to reduce labour taxes. Now it does the opposite and plans to eradicate white economy.»

LCCI urges Finance Ministry and the government to primarily assess if the country can even afford supporting non-working adults with additional tax benefits instead of bringing them back into the labour market.

BNN had previously reported that the ruling coalition’s work group has reached an agreement in regard to using most of the increased budget revenue – approximately EUR 120 million – on security measures in 2016.

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