RIGA, Oct. 19 (Xinhua) -- The so-called solidarity tax charged on high salaries in Latvia is partly unconstitutional, according to a ruling issued by the Latvian Constitutional Court on Thursday.
The court ruled that one of the provisions of the solidarity tax law that aligns the solidarity tax rate with the rate of social security contributions was inconsistent with the Latvian Constitution and would be invalidated as of January 2019, the court said in a statement to the media.
The court found that aligning the tax rates was discriminatory towards those paying the solidarity tax.
According to the Constitutional Court's ruling, such discriminatory treatment of a group of taxpayers lacks a legitimate purpose and violates the principle of equity.
It concluded, however, that an immediate abolition of the solidarity tax would not be possible as long as there was no regulation to replace it.
Since lawmakers will need reasonable time to work out and adopt a new regulation and integrate it within Latvia's tax system to ensure the stability of the state budget, the unconstitutional provision of the solidarity tax law will lose force only on Jan. 1, 2019.
Under the law, effective since last year, solidarity tax is charged on the part of an annual salary that exceeds 52,400 euros (62,060 U.S. dollars).
The Latvian Constitutional Court heard a complaint against the solidarity tax filed by several dozens of employers who objected to the new tax.
They argued that although the solidarity tax is essentially the equivalent of social security contributions, it is paid into the government's basic budget and therefore has no effect on the high-earners' pensions. The applicants insisted that the social security contributions made by each person should ensure an according amount of social guarantees. (1 euro = 1.18 U.S. dollars)
