bnn.lv Latviski   bnn-news.com English   bnn-news.ru По-русски
Monday 19.08.2019 | Name days: Melānija, Imanta
LatviaLatvia

Researchers: income increase is the solution for prevention of inequality

FaceBook
Twitter
Draugiem
print
(No Ratings Yet)

Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUThe main solution for preventing inequality among residents is increasing their income. This includes increasing minimum wages, as mentioned in a study on the influence of tax reform on taxpayers.

Researchers say the core of the tax reform’s idea was the thought of supporting low income recipients to guarantee them with the largest possible wages at the expense of tax benefits. However, it would be a more rational solution to maintain a specific non-taxable minimum for people whose annual income is under EUR 20,004. On the other hand, wealthy residents may not even require non-taxable minimum.

Researchers have concluded that it would be better to preserve the current system, reject gradual transition and speed up non-taxable minimum for small wage recipients.

«This way people would receive immediate benefits from non-taxable minimum, whereas benefits from differentiated minimum would be secured in the form of personal income tax returns,» the study mentions.

Researchers believe PIT application system should be used to support employed people more widely, because working people are the ones who generate added value for the economy. Because of this reason, authors of the study propose also reviewing extension of eligible expenditure and benefits, as well as widen PIT discount use, as it is done in neighbouring countries.

The study also recommends a different approach to make sure labour force tax system becomes fair and equal. This proposal would help prevent formation of PIT debt. Unfortunately, it does not resolve the main problem – use benefits provided by the state to their full extent in cases when taxable income is too small.

Researchers also note that it is necessary to finish work on establishing basic principles for minimum income level, because this would ensure an opportunity to set non-taxable minimum to a specific index, as well as perform timely and adequate corrections.

The study compiles a total of 23 major recommendations for the government. They are divided in to two blocks. According to Ombudsman Juris Jansons, one half of recommendations will not require any major manoeuvrers, whereas the other half will require reorganization of regulations.

The ombudsman has sent a letter to the Cabinet of Ministers, urging members of the government to have a look at the study and its conclusions. «I hope conclusions of this study will serve as a reason for legislators and the government to start working to introduce specific changes to the tax system before the government approves the three-year tax system’s non-review period. The ombudsman’s office and researchers of the University of Latvia are open to discussions and cooperation,» the letter mentions.

On Wednesday, 27 February, the ombudsman told journalists that the tax system failed to achieve its main goal – reduce inequality. He also said officials kept quiet about a number of different problems.

The more dependents a person has, the less they benefit from the tax reform, LU researcher Līga Leitāne told journalists.

She stressed that one conclusion made in the study that the tax reform offers only supposed benefits, additionally, applying different monthly non-taxable minimum with respect of the previous period’s income results in debt or overpayment for residents depending on the number of dependents.

In 2018 Latvia adopted increased non-taxable minimum. Authors of the study have compiled several examples on the influence of changes on representatives of different professions depending on the number of dependents they have.

According to data compiled by researchers, people with the lowest income and dependents are put in the worst possible situation.

The ombudsman stresses that the study proves that Latvia not only drowns in poverty but its politicians have also created conditions making sure people are unable to escape it.


Leave a reply

BNN summary of the week: Latvia’s biggest budget; PNB Bank halts operations; Latvia sad with Latvia

Some positive news surfaced in Latvia this week – Prime Minister Krišjānis Kariņš announced that the country’s next budget will be the largest one yet and will exceed EUR 10 billion. In spite of this, however, financial difficulties have been observed – PNB Bank has ended up in a tight spot. The bank’s shortage of funds has forced Finance and Capital Market Commission to halt all of the bank’s financial operations.

Week in Lithuania: PM Skvernelis undergoes surgery, Nausėda meets Merkel, rebukes Latvia

Last week, President Gitanas Nausėda rejected the government’s candidate for EU judge, hints of big changes at Šiaulių Bankas ahead

Independent Deputies Faction joins forces with Honour to Serve Riga

Riga City Council’s Independent Deputies Faction has signed a cooperation agreement with Honour to Serve Riga political party, pledging support for the party’s mayoral candidate Oļegs Burovs, as LETA was told by the faction’s leader Valērijs Petrovs on Monday, 18 August.

Saeima’s MPC investigation committee requests information on every issued license

The parliamentary committee formed to investigate the mandatory procurement component has requested access to information regarding every issued MPC license and decision made by officials in regards to this field, says the committee’s representative Ilze Vanaga.

Latvian athlete receives two-year disqualification

Former Latvian long jumper Ineta Radeviča has received a two-year disqualification, as confirmed by International Association of Athletics Federation’s Athletics Integrity Unit.

Minister: state budget funds will not be used to compensate PNB Bank’s clients

The Deposit Guarantee Fund is sufficient to pay compensations to affected PNB Bank clients. This means not a cent from Latvia’s state budget will be used, said Latvia’s Finance Minister Jānis Reirs in a telephone conversation with public broadcaster LTV programme Rīta Panorāma on Friday, 16 August.

Estonia to invest 22 million in construction of a new TV house

Estonian government has set aside EUR 22 million for the construction of a new public television building, as reported by Estonian public media ERR.

Another one falls – Latvian FCMC halts PNB Bank’s operations

Operations of PNB Bank [formerly Norvik Banka] have been halted in Latvia, as confirmed by Finance and Capital Market Commission.

Unemployment index in Latvia drops – rate down to 6.4% in Q2

In Q2 2019 Latvian unemployment rate constituted 6.4 %. Compared to the previous quarter, unemployment rate fell by 0.5 percentage points, and compared to the rate recorded a year ago, it dropped by 1.3 percentage points.

64.7% of Latvia’s population reportedly employed in Q2 2019

905.6 thousand people or 64.7 % of Latvia’s population aged 15–74 were employed in Q2 2019.

Lithuanian Conservatives’ tensions: can the party split?

The Conservative Homeland Union - Lithuanian Christian Democrats (TS-LKD) have risen to unseen heights lately – although in the opposition now, in 2016 parliamentary election the party racked up a record support in its 30 years’ history.

Minister: Latvia’s social budget surplus has reached one billion

The surplus of the state social budget has come close of the pre-crisis level – EUR 1 billion, said Latvian Welfare Minister Ramona Petraviča in an interview to LTV programme Rīta panorama on 15 August.

Riga City Council permitted to elect mayor after two-month deadline

In spite of the fact that 21 August will mark two months of Riga City Council working without a mayor, a condition that permits Latvia’s Saeima to dismiss the entire city council, deputies of the municipality will nonetheless have the right to elect a mayor after the deadline, says Environment Protection Minister Juris Pūce’s advisor for legal affairs Valdis Verners.

Lithuanian president unhappy with Latvia’s decision to purchase energy from Belarus

Lithuanian President Gitanas Nausėda has voiced sadness over Latvia’s decision to purchase electrical energy produced at Astravets nuclear power plant in Belarus not far from the Lithuanian border. He admits, however, that this decision was not unexpected for him.

State Real Estate claims ReRe Būve 1 may be trying to circumvent the law

Construction company Rere Būve 1 publicly voices desire to continue implementing the construction contract. However, the construction company’s submitted work schedule for reconstruction of New Riga Theatre has everything changed – volume of work, terms and budget, Latvian State Real Estate reports.

Lithuanian mountaineer dies climbing French Alps

Lithuanian 38-year-old mountaineer Vytautas Mažeika died in a 50 m fall in the French Alps, Lithuanian public media LRT reports with reference to 15min.lt.

Estonia decides to reform pension system; increase not promised

Helir-Valdor Seeder, leader of Estonian coalition party Isamaa, has confirmed that the government has agreed on his proposed pension reform, as reported by Estonian public media ERR.

Ruling party in Lithuania promises national agreement for education affairs

While more and more small town schools close down in Lithuania, the leader of the ruling party promises a «national agreement» for education affairs, as reported by Lithuanian public media LRT.

Viesturs Zeps’ has yet to convince NCP and Unity to support him as mayoral candidate

Mayoral candidate in Riga Viesturs Zeps still has not convinced New Conservative Party and Unity to support him, according to what he said in an interview to public broadcaster LTV programme Rīta panorama on Thursday, 15 August.

Audit: planning problems impede growth of Latvia’s defensive capabilities

Problems with planning are the main reason why Latvia’s defensive capabilities are developing slowly, as concluded by State Audit.

Minister: increase of doctors’ wages is a priority over all other promises

First it is necessary to increase doctors’ wages. Then it will be possible to tackle all other promises, said Latvian Healthcare Minister Ilze Viņķele during a meeting of the Saeima’s Social and Employment Matters Committee on Wednesday, 14 August.

Is Latvia becoming more hospitable? Tourist upturn observed

A total of 781.1 thousand visitors stayed at Latvian tourist accommodation establishments in Q2 2019, which is 1.1 % more than in Q2 2018.

Village in Russia to be evacuated following nuclear accident

Russian authorities have announced evacuation of Nenoksa village, as it is the closest to the military area where a nuclear accident recently happened. This may mean the situation there is far more dangerous than initially reported, as reported by New York Times.

Lithuania’s president says he sees no reason to meet with Putin

A meeting with Russia’s President Vladimir Putin is unlikely and would be pointless, said Lithuania’s President Gitanas Nausėda in an interview to public media LRT.

Shadow of political dealings over SRS. ZZS people – Knoks, Podiņš, Vaivars

Although the State Revenue Service has never had a truly spotless reputation, there is now a much bigger and darker shadow hovering over the service’s director general Ieva Jaunzeme. Serious concerns have been voiced in regards to possible employment of «chosen people» in important posts, which allows them to either halt or push criminal processes forward in order to make life difficult for their political opponents, pretending to fight the good fight while, in reality, realizing some «political hit».

Newest comments