RIGA, March 22 (Xinhua) -- The time for taking crucial decisions about Latvia's planned tax reform is already near, President Raimonds Vejonis told reporters after his weekly meeting with Prime Minister Maris Kucinskis on Wednesday.
The president indicated that the decisions shaping Latvia's tax policy will be like a test for the ability of the coalition government on coordinated action. Moreover, other reforms planned in the health and education sectors as well as public administration will depend on the success of the tax reforms, President Vejonis said.
"First of all, we must not let down entrepreneurs, because they are expecting a solid tax policy plan so they could plan their investments, and secondly, people, the wider public, are also waiting for the reform as they need to plan their income and expenses," the Latvian president said.
He also stressed that local authorities, too, have to support the central government's work on the new tax policy.
"Of course, any reform can bring about losses of in the short-term, but in the long run the proposed tax reform will benefit everyone," the president said.
Prime Minister Maris Kucinskis who also talked to the press following the meeting with President Vejonis, said that his government was closely working with social partners and was determined to push ahead with the tax reform.
The prime minister underlined the significance of the first meeting of a steering group, which was formed on March 10 to work out proposals for the tax reform. The workgroup was due to convene for its first sitting on Wednesday.
Speaking after the workgroup's meeting later in the day, Latvian Finance Minister Dana Reizniece-Ozola said that the workgroup was briefed on the Finance Ministry's proposal to cut the personal income tax rate from 23 percent to 20 percent. While the workgroup expressed support for this proposal, representatives of local authorities were more reserved about the tax initiative.
"The immediate fiscal effect of the Finance Ministry's proposal would be slightly negative - around 15 million euros in 2018," the finance minister admitted, stressing that other tax measures planned as part of the larger reform should compensate for this reduction.
At its next meeting, slated for March 31, the workgroup is expected to debate proposals concerning corporate income tax, health care and the social budget.
