Coalition partners in principle support proposed tax reform

RIGA  - There is conceptual support from the ruling coalition partners to the proposed tax reform, Latvian Prime Minister Maris Kucinskis (Greens/Farmers) told the press after the meeting of the ruling coalition parties today.

He said the discussions will continue but the coalition partners will make progress regarding the tax reform.

Finance Minister Dana Reizniece-Ozola (Greens/Farmers) also said she expected the coalition partners to support the tax reform guidelines when they are put before the Cabinet of Ministers.

Kucinskis will meet with the representatives of the ruling National Alliance this week and with the representatives of the ruling Unity party next week to discuss the proposed tax reform.

The Latvian government will discuss the Finance Ministry's proposals for the tax reform on May 3.

As reported, the Finance Ministry has sent its draft plan for tax reforms to ministries and partners for review. The tax reform proposed by the ministry provides for cutting personal income tax rate from 23 percent to 20 percent, scrapping solidarity tax and leaving microenterprise tax in place. The 20 percent tax rate would be set on personal income that does not exceed EUR 45,000 a year, and a 23 percent tax would be charged on income exceeding EUR 45,000 a year. The differentiated non-taxable minimum income would be significantly increased, and many other changes have been planned.

Reduction of tax revenues as a result of the tax reform will be compensated by excise tax hike on fuel, cigarettes, and alcohol, according to the draft tax policy guidelines for 2018-2021 prepared by the Finance Ministry.