The Saeima Commission conceptually supports the draft state budget for 2021 / Article / LSM.lv

The Budget and Finance (Tax) Commission of the Saeima on Friday, October 23, conceptually supported next year’s state budget bill, the medium – term budgetary framework bill For 2021, 2022 and 2023, as well as budget-related amendments to 28 laws, the Saeima Press Service informed. –

Next year, the consolidated budget is planned to receive 9.58 billion euros in revenue and 10.76 billion euros in expenditure. The basic budget has a revenue of 6.68 billion euros and an expenditure of 7.84 billion euros. In the special budget, revenues are planned at 3.15 billion euros, but expenditures – 3.17 billion euros.

The revenue is planned to decrease by 328 million euros next year, but the increase in expenditures by 744 million euros, while the budget deficit is projected at 3.9% of the gross domestic product.

The largest increase in funding is for health next year, with an additional 183 million for the previously planned increase in the salaries of health workers.

The salary increase is also planned for teachers, and next year it is planned to allocate an additional 33.3 million euros, but in 2022 and in the following years – 49.1 million euros.

In the area of ​​welfare, additional funding of € 95.7 million is earmarked for a guaranteed minimum income for the poor. 70.7 million are planned to be increased to increase the minimum pension and state social security benefit, 23.8 million in local government budgets are intended to finance the guaranteed minimum income and housing benefit, while 1.3 million euros are planned to increase social guarantees for orphans and children left without parental care.

Next year, 10.5 million euros are intended for strengthening the activities of the Ombudsman’s Office, institutions of the justice system, the State Audit Office, the Constitutional Court and other independent institutions. EUR 8.91 million is planned to be used for the exit of public media from the advertising market and the implementation of public procurement in commercial electronic media.

The Covid-19 pandemic has highlighted the need to strengthen social protection for workers in alternative tax regimes, according to the annotation to the draft budget. Thus, it is planned that from July next year these employees will have to pay mandatory social contributions. It is planned to maintain the current patent fee regime only for pensioners and persons with 1st and 2nd disability groups.

From 2021, it is planned to reduce the rate of mandatory state social insurance contributions by one percentage point – from 35.9 to 34.09%. The social tax is 10.5 percent for employees and 23.59% for employers. Changes are also planned for those working in the micro-enterprise tax regime, and in the future only the owner of the enterprise will be able to pay this tax, while employees will have to pay labor taxes as a general rule.

From next year, the minimum wage, which is currently 430 euros, is planned to be raised to 500 euros per month. Up to 1,800 euros instead of the current 1,200 euros, it is planned to raise the threshold up to which the differentiated personal income tax-free minimum is applied. In turn, the maximum non-taxable minimum is planned to be increased from the current 250 euros to 300 euros per month next year. It is planned to increase the non-taxable minimum for pensioners from the current 300 to 330 euros.

It is planned to set the highest progressive personal income tax rate at 31%; so far it has been 31.4%.

For another three years – until the end of 2023 – it is planned to maintain the reduced rate of value added tax in the amount of five percent for Latvian fruits, berries and vegetables. In turn, the excise tax on tobacco products will be increased by five percent every year for the next three years and the tax will also be levied on liquids used in electronic cigarettes. It is also planned to increase the tax on natural resources for certain objects, including the disposal of municipal waste and hazardous waste in landfills.

The changes will also affect the transport sector, and it is planned to increase the toll for heavy trucks, increase the rate for businesses to use powerful cars, and balance the tax rates for cars and trucks with a gross vehicle weight of up to 3,500 kilograms.

The Budget Commission has conceptually supported the possibility to register invoices paid for goods and services paid on the Internet in the Czech lottery.

According to macroeconomic forecasts, which take into account the crisis caused by the pandemic and the implemented support measures for the economy, the gross domestic product at constant prices will decrease by seven percent this year. Next year, economic growth will resume and GDP growth is planned for 5.1 percent next year, but in 2022 and 2023, GDP growth will stabilize at 3.1 percent, according to the annotation to the draft budget law.

Deputies, taking into account the opinion of the Legal Bureau of the Saeima, will encourage to exclude amendments to the Law on the State Audit Office and the draft Law on the Prohibition of Unfair Commercial Practices from next year’s draft budget package, as the draft laws are not related to next year’s draft state budget.

The Budget Commission will ask to see the draft state budget in the first reading at the Saeima sitting on Wednesday, October 28,

in turn, as a deadline for the submission of proposals for the second – final – reading and the draft laws accompanying the draft budget, will be set at 12 noon on 30 October.

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