The planned tax changes in Latvia are not fully thought out, said Chairman of National Competitiveness Commission, Professor of Stockholm School of Economics in Riga, and Chairman of the council of Vidzeme University of Applied Sciences Arnis Sauka in an interview to LTV programme Rīta panorāma.
He stressed that if changes are made to the country’s taxes, they have to be well thought through, but in this case – they are not. “These are quick solutions to get some money,” said Sauka, adding that it is necessary to think about the possible consequences of these changes in the long term.
According to Sauka, it would have been a better idea move towards increasing value added tax (VAT) rate.
He also mentioned that the government’s initiatives for the next year’s budget can be perceived as “patching the budget”.
As previously announced, next year’s state budget plan includes an increase to the minimum wage, the introduction of a fixed non-taxable minimum from 2025 and the introduction of two-stage personal income tax (PIT) rates. It is also proposed to lower residents’ contributions to the 2nd pension level, diverting one percentage point from contributions to the first level pension.
The Cabinet of Ministers is scheduled to approve the draft State budget for 2025 and the budget framework for 2025, 2026 and 2027 on the 14th of October this year. In turn, the package of budget bills for 2025 is scheduled to be submitted to the Saeima on the 15th of October.