Assess how to increase the non-taxable minimum / Article / LSM.lv

The non-taxable minimum income tax will be increased from next year, but it is necessary to assess how much. This was stated by Prime Minister Krišjānis Kariņš (“New Unity”) after the parties’ talks on tax policy. The parties value various changes in labor taxes, but the negotiations are difficult because the priorities of political forces differ.

In early July, Finance Minister Janis Reirs (“New Unity”) announced that the parties were considering introducing a 5% health tax. This would mean that most of the social contributions, as well as two percentage points of personal income tax, would go to the financing of health care. In this way, it is intended to obtain funding for raising medical salaries. The reform would also introduce a minimum level of social security contributions for all tax regimes. Prime Minister Kariņš points out that the government could see a report from the Ministry of Finance on it next week.

Negotiations between the parties are difficult. The new Conservative Party (NCP) insists that the reform should be accompanied by a differentiated non-taxable minimum of EUR 500, which would increase the state budget deficit. JKP leader Jānis Bordāns emphasized after the meeting of the parties that he was ready to continue the negotiations, but the solution was still a long way off.

“I think we will get stuck looking for a solution if all coalition partners do not play open cards and try to offer information reports on some of the more profitable segments and other segments proposed by other coalition partners, leaving them to be addressed at a later date.” said the Minister.

Mr Bordan emphasized that the tax-free minimum should be raised so that the self-employed and those working in the micro-enterprise tax regime do not enter the shadow economy. Kariņš, meanwhile, pointed out that he supports raising the non-taxable minimum, but it is necessary to assess how much.

“We need to look at how we can relieve low wages more from taxes. That is also the goal, and it is now just a question of how much we can increase the tax-free minimum. Not whether we increase it, we will increase it, but how much we can and do not take away [citām vajadzībām], “said Kariņš.

The Prime Minister expressed confidence that an agreement could be reached, but that the interests of other parties should also be reconciled. For example, “KPV LV” opposes raising the excise tax on cigarettes in order not to increase the amount of smuggling, while the National Union wants to increase state family benefits.

The Minister of Justice Bordāns also emphasized that the JKP believes that along with the tax review, it must be clear how the real estate tax will change after the recalculation of cadastral values, which is planned for 2022.

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