Protests mark dissatisfaction with next year's budget cuts

RIGA - The start to this week was marked by the rallying cry of thousands of angry voices, protesting under a multitude of different banners, all in outcry over the anticipated Dec. 1 final budget vote by the Saeima. Several hundred representatives from trade unions and their supporters gathered on the morning of Dec. 1 at the entrance to the Saeima, many holding placards with messages such as ‘If A Hen Lays Golden Eggs, It Must Be Fed, Not Beaten,’ ‘Bring Godmanis To Court!’, ‘Latvia - Superpower of the Unemployed?’ and more. Some people waved flags. All were animated.

The rally participants greeted the members of parliament arriving to work with cat-calls, whistling, shouting and yelling criticism at them, reported news agency LETA. They urged the MPs to prove that they have a conscience, and to not pass the budget as written, and to stop the ‘stealing.’ Several dozen police officers watched from the sidelines.
The demonstrations show that people living in Latvia are not “just a poor bunch of donkeys begging for Europe’s money, but are intelligent and brave people,” declared Free Trade Union Confederation of Latvia Chairman Peteris Krigers. Krigers said the day’s events were an important signal not only to the Latvian government or Saeima, but also to the IMF and the European Commission.

He said that both of the day’s demonstrations were successful because they were able to express their points of view to the government and Saeima. Krigers then said that trade unions will not be organizing similar demonstrations in the near future.
It was reported that around 5,000 people were out in the streets for the protest rallies, the second of the day a protest march organized by the Latvian Student Union and the Latvian Education and Science Workers’ Association. The students, education and science workers and their supporters participating in the march were expressing their demands that the government maintain funding for the education and science sectors next year at the same level as in 2009.

Students booed Saeima members as they left the parliament building to go to committee buildings. The students not only reproached Saeima members for squandering state money, but also demanded that the money taken from education be returned. At the same time, many protesters kept demanding that Education and Science Minister Tatjana Koke (Union of Greens and Farmers) come out to meet the protesters.

Eventually Koke, surrounded by several bodyguards, did exit the Saeima building, but did not say a word to the protesters and returned to Saeima in less than a minute, upon which she was then booed for being afraid to talk to the protesters.
The protesters went on to demand the resignation of Koke and dissolution of the Saeima.
On Nov. 30, over 1,000 bikers gathered in front of Saeima to protest against the planned hike of the annual duty on motorized vehicles, starting next year. Many car drivers expressed their support by honking their horns while riding around the Riga Old Town.

The bikers were holding placards with statements such as ‘Do not make us break the law,’ ‘Exclusive roads for exclusive means of transport,’ and others. One motorcycle, covered in a black cloth, was placed by the parliament building. There was also a wrecked car that symbolized the possible consequences of acting without thinking. One protester, Russia and Northern Europe competition champion, Janis Rozitis, on his bike, jumped into the Daugava river.
Feeling the pressure, the Saeima Budget and Finance Committee passed in the final reading the law amendments to raise the annual duty on motorcycles, as of Jan. 1, to 24 lats rather than the initial 50 lats; the levy is currently 3 lats.

The problem for the Latvian state, however, is that it’s out of money and facing substantial deficits for years to come. The government has been under pressure to pass a budget that meets international lenders’ requirements to cut the deficit in 2010 by 500 million lats (714 million euros) in order to keep the aid money flowing. The global economic crisis has hit Latvia hard, and the government is scrambling to cut spending and raise taxes as tax revenue continues to fall.

Latvia’s 2010 budget will boost trust in the state and pave the way for the next part of the international loan, affirms Prime Minister Valdis Dombrovskis, reports Bloomberg. Passing the budget will “be a positive signal that Latvia will send to the international community,” he says, which will allow Latvia “as quickly as possible to overcome the economic crisis.”
Saeima, in a vote of 64 ‘for’ and 30 ‘against’ passed the budget. The plans include new taxes on real estate, capital gains, earned interest income and deposits in addition to expenditure cuts. Amendments to the law on real estate tax stipulate that starting Jan. 1, next year, the real estate tax will apply to residential space. There will be a 0.1 percent tax on one- and two-household homes, as well as apartment buildings with up to 40,000 lats assessed value; 0.2 percent on property with 40,001 - 75,000 lats assessed value and 0.3 percent tax on property with over 75,000 lats assessed value.
The tax on land will be equal to 1.5 percent of the property’s assessed value. Saeima also supported imposing a higher property tax on uncultivated farmland, equal to three percent of the land’s assessed value.

Amendments to personal income tax passed, raising it to 26 percent from the current 23 percent, starting Jan. 1. Income from dividends will have a new tax, at 10 percent. A 26 percent tax (instead of the current 15 percent) will pertain to the so-called economic activity producers, including those receiving royalties.
Next year’s budget deficit may narrow to 7.6 percent of gross domestic product, which compares with an initial European Commission target for an 8.5 percent deficit.

Latvia turned to a group led by the European Commission and the IMF for the international loan package after its second biggest bank, Parex, failed last year. The country’s economy contracted a preliminary 18.4 percent in the third quarter, as consumer spending slumped, credit has evaporated and manufacturing and exports have declined.