High earner slams new tax on high earners

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The Latvian government's plan to introduce a so-called 'solidarity tax' on high salaries is wrong, and if it is approved by the parliament the tax will be contested in the Constitutional Court, Juris Gulbis, CEO of the majority state-owned Lattelecom telecoms company, said in an interview with public television Wednesday.

The Lattelecom head also criticized Latvia's draft 2016 budget drawn up by the government. "The revenue part is drawn up by introducing new inappropriate labor taxes, which is contrary to what the government promised last October. The solidarity tax puts an additional burden on employees, not capital. We have the biggest inequality between taxes on capital and taxes on labor," Gulbis said.

The Finance Ministry argues that fewer than 5,000 of the nation's top earners will be affected by the new tax and that the current system is unfair, placing a disproportionate burden on people with modest incomes. 

The Lattelecom CEO argued that the solidarity tax is no rich man's tax. "This is a rushed measure intended to fill up the budget, but in the long term it will undermine the country's competitiveness," Gulbis said.

"I hope that this silly tax will not be adopted after all. We are still working with the parliament and government to prevent its adoption. Of course, if it is adopted, we will file a lawsuit with the Constitutional Court. Time will tell... This is an unfair tax, outside the whole tax system. It does not serve the main purpose, to ensure progressiveness. While a person earning 75,000 a year pays taxes at the effective rate of 56 percent, a person receiving 20 million in dividend only pays 10 percent. There is no proportionality, progressiveness or solidarity in this," Gulbis raged.

According to his official income declaration, Gulbis earned €392,000 last year, easily making him one of the country's top earners.

The Latvian government on Tuesday approved the solidarity tax, as one of the key measures of its 2016 budget, which will be debated by parliament in coming weeks.

Lattelecom shareholders are the Latvian state (51 percent) and the Scandinavian telecommunications group TeliaSonera (49 percent).

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