RIGA, June 16 (Xinhua) -- The debate on Latvia's tax reform should be started anew, members of the Latvian Chamber of Commerce and Industry (LCCI) said Friday.
They also strongly objected to the government coalition's plan to raise social tax and introduce a progressive income tax.
After Latvia's center-right government coalition decided this week to raise social security contributions by one percentage point and consider greater progressivity for personal income tax, members of the LCCI convened for a meeting at which they concluded that entrepreneurs can no longer support the tax reform plan, which originally was supposed to ease the tax burden on labor and not vice versa.
The LCCI is ready to voice its protest in stronger terms, but for now, the LCCI is calling on coalition partners to sit down at the negotiations table to start a new debate on the basic framework of the planned tax reform, it said.
LCCI president Aigars Rostovskis indicated the tax reform was initially intended to reduce labor taxes, but that with its decision to raise the social tax in order to provide money for Latvia's underfunded health sector the government coalition has taken a step into opposite direction.
The LCCI president also objects to linking the efforts to provide money for health care to the tax reform. He believes that the necessary financing for health care can be secured by using budget funds more economically.
LCCI board member Janis Endzins indicated that the government's efforts to provide money for the health sector threatened to torpedo the tax reform, and believed that the debate on the tax reform has to be started anew.
Andrejs Vaivars, a spokesman for Latvian Prime Minister Maris Kucinskis said on Latvian Television, however, that there will be no turning back, as the decision on health care funding has been taken and it is necessary to move ahead with its implementation.
At the beginning May, the Latvian government approved a tax reform, which, among other things, provides for raising the minimum wage and nontaxable minimum income.
The reforms were supposed to ease the tax burden on labor, although the tax rate on high salaries would remain unchanged. Reinvested profit will be exempt from taxation, and the minimum wage and untaxable minimum income will be increased.
Compensatory measures are also being planned to balance the national budget, and keep the budget deficit from growing uncontrollably. Enditem
