Latvia to introduce widespread tax hikes

RIGA - The Latvian Cabinet has agreed to put in place a number of new tax hikes in an effort to raise funds for next year's budget.

The state hopes to raise some 57.4 million for next year's budget through the increases.

Finance Minister Einars Repse said that the government had agreed to increase the personal income tax rate from 23 percent to 26 percent and introduce a progressive real estate property tax.

Companies making profit exceeding 5 million lats will face a 25 percent tax instead of the current 15 percent. Moreover, capital gains will undergo a 15 percent tax rate.

Latvia has to cut its budget in order to meet the terms of a bailout loan from a group international lenders - including the IMF and the EU - of more than 7 billion euros. Latvia's economy, meanwhile, is suffering one of the worst recessions in Europe with the GDP shrinking by more than 18 percent year-on-year for three consecutive quarters.