News The JPP allows for a compromise on raising the...

The JPP allows for a compromise on raising the non-taxable minimum

Compromises are always possible and this also applies to New Conservative Parties (JKP) on the increase of the personal income tax (PIT) non-taxable minimum, expressed Gatis Eglītis (JKP), a deputy of the Saeima Budget and Finance (Tax) Committee.

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At the same time, the politician expressed skepticism about the discussions so far on this issue, because in the negotiations on tax reform Ministry of Finance (FM) has been slow and reactive. In the opinion of the JKP, the non-taxable minimum should be raised to 500 euros from 2021 and there is no need to postpone this step, the parliamentarian said.

Eglītis added that a compromise could be on the amount of income to apply the non-permanent minimum of 500 euros. JKP’s offer envisages applying it to income of up to 1,500 euros, but the compromise could be to apply a non-taxable minimum of 500 euros to 1,400 euros or 1,300 euros of income, the politician explained. The deputy pointed out that 1,300 euros is still a relatively small salary, from which it would not be justified to pay too much personal income tax.

The JPP itself has not currently offered such a compromise in negotiations with coalition partners. According to Eglītis, they are not asked to offer any compromise, nor is the JKP satisfied with the style of working as the Minister of Finance. Jānis Reirs (JV) and the Parliamentary Secretary of the Ministry of Finance Atis Zakatistovs (KPV LV). The deputy pointed out that at the technical level, a lot had already been agreed with several ministries, but now it was all “swept under the rug”.

In case the compromise is not reached, it is better to postpone the tax reform and not to do it now, because the JKP does not want to allow repeating the changes made during the previous 12th Saeima, when a lot has been “split on the board”, including rates, said the politician. JKP also opposes the “collapse” of alternative tax regimes, without putting anything in place, Eglītis pointed out.

As reported by the JKP, insisting on raising the non-taxable minimum to 500 euros from 2021, five coalition parties have suspended negotiations on the planned tax changes indefinitely.

When interviewing the representatives of the parties forming the coalition, it was found that the JKP has a different vision of changes in the tax system from the other coalition partners. In the opinion of JKP, from next year the non-taxable minimum should be raised to 500 euros.

On the other hand, the other coalition partners consider the JKP offer to be too fiscally large – in the 2021 budget it would require an additional 120 million euros, which would make it more difficult to fulfill commitments such as raising salaries for doctors and teachers. The coalition partners are ready to discuss raising a more moderate non-taxable minimum from next year.

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