Distribution of personal income tax between state and local government budgets might be changed

  • 2020-09-01
  • LETA/TBT Staff

RIGA - In order to increase budget revenue, a proposal is being revised to increase the share of personal income tax paid into the state budget by 5 percent, said Prime Minister Krisjanis Karins (New Unity) after the government coalition meeting today.

The Finance Ministry has proposed to change distribution of personal income tax between the state and local government budget. At present local governments receive 80 percent of personal income tax, while the remaining 20 percent are paid into the state budget. The Finance Ministry has proposed to change this distribution ratio to 75 percent and 25 percent.

Karins said that this would help to find funds for medics' and teachers' wages and increase of the guaranteed minimum income.

As a compensating mechanism, local government might receive funds from the so-called "recovery fund" worth EUR 2 billion, the prime minister said.