He admitted that the current tax reforms marked an agreement with businessmen on the simplification of the tax system. “However, the reform costs something, and the rest of the questions have not been answered. Ministries are desperately looking for some kind of cuts, because internal security, I’m afraid, is running out of money again,” said the politician.
“I predict, looking at how the tax forecasts are coming out and how much the agreement with businessmen costs, that some tax will be raised under the slogan “security”. The same value added tax, although there is a categorical opposition to it from several. My feeling is that the flag will be raised about security and something like that is expected, because otherwise it will not be really possible to patch it up with small cosmetic tax increases,” Kučinskis assessed.
According to him, the offer of tax reform has come too late, and now it will be extremely difficult for politicians to put together a not yet approved reform and a plan for next year’s budget.
It has already been reported that, based on the proposals and opinions presented at the meetings of the Tax Policy Improvement Coordination Group, a labor tax proposal has been developed. If the government and the Saeima support the planned tax changes, from 2025 it is planned to set the fixed non-taxable minimum for all salaries in the amount of 510 euros per month and from 2026 it will be increased to 550 euros and in 2027 to 570 euros per month. With this step, the social partners and the government agreed to start implementing the principle of linking the non-taxable minimum to the minimum wage with the aim of reaching the amount of the non-taxable minimum amounting to 80% of the minimum wage. The minimum wage in 2025 will increase from 700 to 740 euros per month, in 2026 to 780 euros per month, from 2027 to 820 euros per month, and from 2028 to 860 euros per month.
Balancing the non-taxable minimum with personal income tax (PIT) rates and to simplify the labor tax system, it is planned to set a single PIT rate of 25.5% for incomes up to 105,300 euros per year (8,775 euros per month). For incomes above 8775 euros per month, the solidarity tax (33%) will be maintained.
Currently, the differentiated non-taxable minimum, or the part of the salary that is not taxed, is applied in a gradually reduced amount to the annual income of a person up to 1,800 euros. Employers have long pointed out the complexity of this system and the need to simplify it by moving to the same fixed non-taxable minimum for all.
As the amount of the non-taxable minimum will be unchanged in the future, regardless of the size of the salary, citizens will have more money “on hand”, despite the fact that the VAT rate would change from 20% and 23% currently to 25.5%, explains the Ministry of Finance.
2024-09-17 09:44:55