Non-taxable minimum income might be raised to €350

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Tax policy changes, currently being worked out by Finance Ministry and to be presented to the coalition in late February, include a proposal to increase the non-taxable minimum income on small salaries to €350 a month, reported LTV on February 13.

"Increasing the non-taxable minimum is one of the scenarios we're looking at in order to decrease income disparity," said Finance Minister Dana Reizniece-Ozola.

For people earning the minimum wage (€380), this would mean that just €30 of their monthly income is burdened with a 23% income tax.

The minimum non-taxable income for 2017 is €60 a month and €115 for people earning low wages. Residents can apply for a refund of the tax annually.

This might mean that municipalities will have to squeeze their budgets, which are largely dependent on the income tax. However the Finance Minister said there'll be a compensation mechanism in the tax changes.

While on February 14 PM Māris Kučinskis told Latvian Radio that taxes-especially labor taxes-won't be raised significantly in the upcoming tax reform, and that the Value-added tax will remain on the current level.

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