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Adoption of Latvia's tax reform delayed after coalition partner raises questions

Xinhua, May 3, 2017 Adjust font size:

After hours of debating, the Latvian government decided on Wednesday to postpone the planned adoption of Latvia's tax reform for a week as the center-right Unity, a partner in Latvia's tripartite government coalition, raised three issues in the reform's context.

At Finance Minister Dana Reizniece-Ozola's request, the government initially agreed to discuss the tax reform plan during the open part of the cabinet meeting, but after hearing Unity's objections the ministers continued debating the tax proposals behind closed doors.

Economics Minister and Unity member Arvils Aseradens told his colleagues that there were three questions his party wanted to be answered before it could support the tax reform plan.

The first issue raised by Unity concerns Latvia's underfunded health sector. The party wants the reform plan to include provisions that would ensure the necessary financing for healthcare. Secondly, Unity expects the government to ensure that the tax measures to not lead to a widening of national debt, and thirdly, the tax reform must not hamper the implementation of various government projects, or the so-called new policy initiatives.

Aseradens said the cabinet ministers representing Unity had not yet received their party's mandate to approve the tax reform.

Although the adoption of the tax reform was put off, the ministers continued debating the measures proposed in the reform plan.

Last month, the Finance Ministry sent the blueprint of the national tax policy framework 2018-2021 to all ministries, as well as social and other partners in the hope that the government might adopt the plan by the end of April, but the adoption of the draft document was delayed as Unity started raising objections to the plan.

The main tax reforms proposed by the Finance Ministry include setting a zero-tax rate on companies' undistributed profit and a 20 percent tax rate on distributed profit, cutting the personal income tax rate from 23 percent to 20 percent, scrapping solidarity tax which is charged on high salaries, leaving a reduced tax on microenterprises in place, and raising the minimum monthly wage to 430 euros from 380 euros. Endit