Vilks: Labor taxes will need to be cut more decisively

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In the area of labor taxation, the actions of politicians must be more decisive, according to Andris Vilks, a member of the Council of the Bank of Latvia and a former Minister of Finance. 

In an interview with Latvian Radio, he said that although politicians have expressed a desire to reduce labor taxes, their decisions on the matter are being made very slowly.

As an example, he cited the payment of Covid-19 crisis benefits to families with children and pensioners, arguing that if such measures could be agreed and enacted quickly, then it must also be possible to act with similar urgency on labor tax.

"When it came to deciding on family support and child support, several hundred millions were allocated in a short time, without too much discussion in government," he said.

He also pointed to the need to address the taxation system as a whole by reducing the size of the shadow economy and developing a system in which as many people as possible pay their taxes.

According to him, changes are also needed in the social sphere - Latvia has an unorganized social budget, because this sphere has never been politically attractive. 

Regarding the changes in the payment of social tax, which are planned from July 1, Vilks said that the direction is right. He admitted, however, that the middle of the Covid-19 crisis was not the time to introduce substantial changes.

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