World Bank suggests adopting progressive income tax

The World Bank has advised Latvia to adopt a progressive labor tax ranging between 19% for low-earners and 29% for high earners, Finance Minister Dana Reizniece-Ozola (Greens/Farmers) said in an interview with LNT commercial TV channel on Monday.

The minister said that changes in the taxation system will be discussed with entrepreneurs' organizations and experts, and that the proposals will be based on recommendations provided by World Bank experts.

Reizniece-Ozola said that one of the World Bank's recommendations is to ensure progressive labor income taxation.

The World Bank proposes setting personal income tax rates from 19% to 29%, where the lowest threshold would be €360 and the highest €1,300.

The minister said that business tax rebates would be revised and that the World Bank recommends raising taxes on capital.

The World Bank experts don't think that the value added tax (VAT) should be raised.

Latvia has commissioned World Bank experts to carry out an audit of Latvia's tax system.

The government plans using the results of the research both for working on the 2017 budget and planning the mid-term tax policy.

Previously the experts claimed that Latvia's tax system doesn't address inequality.

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