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Vilks: reduction of income inequality should not remain solely as slogans and promises

Andris Vilks/LETA.
«Tax policy stability is a matter for which everyone has to be responsible – politicians, taxpayers and society as a whole. It is one of the most important conditions for successful economic growth,» – notes Latvian Finance Minister Andris Vilks.

In order to promote the principle of tax policy stability, transparency and predictability, the government supported amendments to the Law on Taxes and Duties this week. These amendments provide for restrictions on frequent and unreasonable tax rate changes. From now on, it will only be allowed to change tax rates only once a year and amendments are to come into force no sooner than six months after their approval. «I believe it will be an important step for our entrepreneurs, because this will provide them with information about expected changes in due time, which will allow them to plan the development of their businesses accordingly. Upon introducing planned changes, we will need to gradually reduce the number of changes to regulations that govern taxes,» – as noted by the Finance Minister.

The FM also plans to coordinate the signing of the Tax Policy Strategy for 2015-2017 with its partners from the Latvian Employers’ Confederation and Latvian Chamber for Commerce and Industry.

According to Vilks, the agreement will help gradually reduce the burden of labour tax and help maintain the current social insurance fees for employers and employees on the current level. It is also planned to improve the current Micro-enterprises Tax regime in order to secure their longevity and carry out other measures to reduce tax burden and improve the overall system.

«Speaking of tax policy stability, we also need to come back to the matter of reducing shadow economy, because this particular section of economy makes tax revenue hard to predict. Lower tax revenue also limits the country’s economic abilities to solve different problems,» – says Vilks.

According to Vilks, FM had previously proposed to introduce a differentiated tax-free allowance reduction of income inequality. It was also proposed to support the increase of minimum wages and financial support for families with children. Unfortunately, proposals in regard to differentiated tax-free allowance did not receive enough political support. Nevertheless, it is worth coming back to this matter in order to improve the current situation and residents’ level of welfare.
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