Budget changes in 2016 - mostly tax increases

The state budget draft was approved on Monday, and the Finance Ministry is currently working on the nuts and bolts of the 2016 state budget, which will have to be approved by the Saeima later on.

On Tuesday evening, Latvian Television briefly laid out the proposed changes that most ordinary Latvians will be affected by next year. 

Automotive fuel will become more expensive - gasoline and auto gas will cost 3 cents more next year, while diesel fuel will cost 1 to 3 cents more. 

Smokers will have to cough up some more money as well, as there'll be an increase (€2.51 per kilo) in the cost of tobacco leaves, while drinkers will have to pay 5 to 18 cents more for a liter of drink.

Rent for flats will become more expensive, as maintenance costs will now be taxed with the VAT (21%). The same applies to tickets to cultural events, such as concerts.

A "solidarity tax" will also be introduced, though actually it's just the removal of the ceiling for the State Social Insurance Mandatory Contributions. It applies to people earning more than €4,000 a month. These earners will now have to pay the same proportion of their income in taxes as everyone else.

The minimum wage will be increased to €370 a month, from the current €360. The nontaxable income minimum will be raised to €85 from the current €75 a month. 

Starting next year, a wage-differentiated nontaxable minimum will be introduced, allowing earners with lower wages to receive tax refunds. Those better off will be entitled to lesser benefits. 

The state didn't uphold its promise to reduce the Personal Income Tax to 22%, so it continues standing at 23%. State companies will have to pay 90%, as opposed to 70%, in dividends to the state budget.

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