RIGA - If the European Commission does not authorize Latvia to increase its budget deficit, the pending tax reform will have to be scaled down, Augusts Brigmanis, chairman of the Union of Greens and Farmers' Saeima group, said in an interview with Latvian Radio.
The Commission is to announce next week whether Latvia will be permitted to increase its budget deficit so the tax reform could be carried out, said Brigmanis. The main question is how much the budget deficit may increase, and for what purposes. If Latvia is not allowed to raise its budget deficit, the reform will have to be scaled down to what can be done without increasing the budget deficit, he explained.
If so, the minimum wage and non-taxable minimum income could increase less than currently planned, said Brigmanis, adding that the government would have to allow extra funds for healthcare anyway. Overall, Brigmanis is confident that the reform will be implemented, but the current reform plans may be changed still.
Commenting on health care financing system, Brigmanis said social contributions could be raised, but there would also be mechanisms to compensate for the increase, for instance, a higher minimum wage.
As for Unity's opinion about the tax reform, the party should decide for itself what it wants, said Brigmanis.
As reported, the government on May 9 endorsed the tax policy guidelines 2018-2021 drafted by the Finance Ministry, but solutions to some issues, including healthcare funding, are yet to be agreed upon.