Raising non-taxable minimum income requires funds that do not exist - Silina

RIGA - Raising the non-taxable minimum income has to be reviewed in the context of other issues, as it is physically impossible to isolate from next year's budget, Prime Minister Evika Silina (New Unity) told the press on Tuesday, commenting on the criticism of the Latvian Federation of Free Trade Unions (LBAS) about the tax burden.

She pointed out that raising the non-taxable and differentiated non-taxable minimum income would result in less taxes being paid and would require even more funds in the budget, which simply do not exist there at the moment. She also pointed out that the non-taxable minimum income affects a number of other issues.

"It is not possible to do that in this budget at the moment, because the municipalities have also said that in that case we should also think immediately about municipal funding, because the non-taxable minimum income directly affects municipal revenues," said Silina.

Economics Minister Viktors Valainis (Greens/Farmers) also confirmed that the issue has not disappeared from the agenda of the ministry, but it should be considered in the "overall tax harmony", which is influenced by incentives, sick leave regulation, local government equalization funding and others.

As reported, on Monday, at the meeting of the National Tripartite Cooperation Council, LBAS criticized issues in the next year's state budget that concern the non-taxable minimum income, salary disproportion in the security structures, as well as funding for vocational education institutions and railway infrastructure.

LBAS said that the maximum applicable non-taxable minimum income should be increased to at least EUR 700 per month, so that it equaled minimum wage in 2024. At the same time, to ensure a greater benefit for employees earning the average salary, it is essential to raise the differentiated non-taxable minimum threshold, upping it from EUR 1,800 to EUR 2,800 per month.

The Free Trade Union Confederation of Latvia admits that, unfortunately, attempts to negotiate an agreement with employers on this matter have so far been unsuccessful and the raising of the non-taxable minimum threshold will be put off until 2025.