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Latvian PM's tax initiative to be put before parliament despite lack of coalition partners' support

Xinhua, December 13, 2016 Adjust font size:

The Latvian government coalition on Monday failed to agree on Prime Minister Maris Kucinskis' latest tax proposals, but the ruling Greens and Farmers Union is determined to put them before the parliament budget committee this week.

The proposal to scrap mandatory minimum social security contributions and to raise the microenterprise tax rate from 9 percent to 15 percent, was first debated by the ruling Unity faction in the parliament and later also by the coalition cooperation council.

Despite the prime minister's efforts to convince Unity, it remained the only one of the three coalition partners still reluctant to support the tax initiatives.

Kucinskis considers the initiatives necessary in order to prevent the situation from getting out of control, as many entrepreneurs have warned of massive layoffs if the social contributions requirement comes into effect on January 1, 2017.

Although Kucinskis ruled out pushing ahead with his proposals without Unity's backing last week, he said now that the parliament budget committee would vote on the tax initiatives anyway on Tuesday.

Unity had come up with an alternative proposal -- to let entrepreneurs choose between paying the social security contributions and paying the increased 15 percent microenterprise tax, but Kucinskis rejected this idea, arguing that the time is too short to prepare this legislation property.

Unity vice-chairman Edvards Smiltens said on Monday that the party would make the final decision at the last moment on Tuesday morning.

He also noted that the party does not consider the prime minister's proposals completely unacceptable, but objects to the hasty and chaotic way the Greens and Farmers Union has been pushing ahead with this legislation.

Unity insisted on the necessity to tackle the issue of employees' social security and believed that the social contributions requirement should be postponed, but not scrapped altogether.

Under the previous plan which was adopted in 2015, all working people in Latvia, including part-time employees and those earning less than the minimum wage, would be required to pay 97 euros (102.78 U.S.dollars)a month in mandatory minimum social insurance contributions from 2017. Endit