New president hopes for an end to his taxing times

RIGA - Latvian president-elect Valdis Zatlers has been ordered to pay a 250 lats (355 euro) fine for providing incomplete information in his income declaration.

Zatlers, due to take office on Sunday July 8, told journalists that he has settled his issues with the State Revenue Service and that according to their findings he has no outstanding tax liabilities.

Speculation had been rife that Zatlers had evaded tax in connection with undeclared payments he accepted from patients while working as a surgeon.

The incoming president admitted that the process had been an unpleasant sideshow during his run-up to power.

Zatlers further said he would closely follow the work of a Health Ministry task force that has been established to look into the issue of "gratitude" payments to medics, and voiced hope for legislative amendments to clarify precisely what should be included in income declarations.

"The greatest problem is that the public is dissatisfied with the revenue service's findings. People will be satisfied only when laws are amended by clearly stating which income must be declared," Zatlers said.

Asked about the lessons he has drawn from the controversy, Zatlers mused: "It is necessary to be active when facing a problem, it is necessary to go to the people and speak about it loudly."

Zatlers said he was glad that he has been heard at last, because, in his words, he had been telling politicians about the "gratitude" issue for years.

The Latvian State Revenue Service ultimately concluded that the extra payments Zatlers received from his patients while working as a surgeon, are not liable to taxation. In a letter to the president-elect, the tax authority said that an annual income declaration must be submitted if the total non-taxable income received during the year exceeds fourfold the non-taxable minimum income set for the respective year, in Zatlers' case 1,248 lats in 2005, 1,536 lats in 2006 and 2,400 lats in 2007.

"Considering the above information you must assess your income and submit the annual income declaration if necessary," the tax authority said in its letter.

The issue of undeclared extra payments to doctors was raised almost as soon as Zatlers' nomination for the presidential post was declared. After he was elected Latvia's new president, Zatlers asked the tax authority to analyze the situation and recommend further steps he should take.