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On Monday, 30 November, the Saeima in the final reading adopted the Law on the State Budget for 2016, the Medium-term Framework Budget Law, amendments to 23 laws and a new law.
The budget for 2016 prioritises internal and external security, accessibility of health-care services, and high quality education.
The expenditure side of the consolidated budget for 2016 is planned to amount to 7.69 billion euros, which is by nearly 215 million more than this year, while the revenue side is planned to increase by 148 million, reaching 7.4 billion euros. According to the Ministry of Finance, the planned budget deficit will amount to one per cent of the GDP.
Additional resources have been allocated for the improvement of the National Armed Forces combat capabilities, the development of the National Guard and the Youth Guard, as well as strengthening of cybersecurity. Likewise, additional funds are earmarked for raising the salaries of police officers, firefighters, rescuers and personnel of the Prisons Administration, as well as the Border Guard in line with the focus on bolstering national security. Additional funds have also been allocated for managing, maintaining and renovating municipal roads and national motorways.
Upon considering proposals submitted for the final reading, the Saeima supported several initiatives, projects and requests for increased remuneration. Nine million euros are earmarked for the teachers’ remuneration system reform in municipal and private education institutions as of 1 September 2016. Likewise, additional resources are allocated for the remuneration of personnel in the following institutions: the State Probation Service, the Ombudsman’s Office, the State Employment Agency, the State Social Insurance Agency and the State Audit Office.
Additional funds are allocated for the health-care sector, such as emergency medical services, as well as 10 million euros for remuneration of medical personnel.
The Ministry of Education and Science will be allocated 2.3 million euros to disburse compensations to parents who are forced to pay private day-care fees due to the lack of municipal pre-school institutions. These compensation system is in effect until 31 May 2016.
The minimum wage will be increased from 360 to 370 euros, while the non-taxable minimum income will remain at 75 euros.
The personal income tax will remain at the current 23 per cent; the tax allowance for dependants will be increased from 165 to 175; however the allowance will no longer apply to adult able-bodied dependants.
Employees will be subject to the minimum mandatory state social insurance contributions from the minimum monthly wage. The Saeima has set a transition period according to which in 2017 contributions will be levied from three quarters of the minimum monthly wage, and as of 2018 from the full amount of the minimum monthly wage. This provision will apply also to employees of micro enterprises.
The Saeima also supported several measures aimed at reducing inequality; a differentiated annual non-taxable minimum income – to be calculated from the total taxable income - will be gradually introduced.
Furthermore, solidarity tax will be introduced and applied to socially insured employees and self-employed natural persons with annual income exceeding the maximum amount of mandatory social insurance contributions set at 48,600 euros a year. The tax revenues will be transferred to the general budget.
In order to ensure a proportionate real estate tax increase that takes into consideration the increase in market and cadastral value of agricultural land, a special cadastral valuation method will be applied to agricultural properties exceeding 3 hectares starting next year.
Next year, a higher excise duty will be applied to petrol and diesel, alcohol and smoking tobacco; the value added tax (VAT) will be applied to property management services. Likewise, higher taxes and duties will be applied to gambling.
Resources will be allocated for improving measures to combat shadow economy. Special attention will be given to improving the technical requirements and control of POS terminals, POS systems, specialised devices and equipment. Improvement of information exchange between credit institutions and the tax administration is also planned.
In order to combat tax fraud, as of next year the company car tax will have to be paid for passenger taxis. Furthermore, a significantly higher road tax will be charged for cargo vehicles with a total weight of up to 12 tonnes.
With the aim of combatting VAT fraud, as of next year reverse VAT charges will be applied to purchases of mobile phones, laptops, and tablets, and deliveries of microchip devices. The reversed procedure will also be applied to several types of fuelwood.
The Saeima supported the proposal to allocate EUR 20,000 to continue the introduction of the Honorary Family Certificate. EUR 150,000 have been granted for social rehabilitation of abused children, while EUR 85,500 have been allocated to the Gaiļezers Children’s Hospital for purchasing a virtual reality device with which to teach and help exercise children with development disorders and limited motor skills, as well as special beds for early rehabilitation of children with severe and moderate functional disorders.
The parliament also supported the proposal to allocate EUR 55,000 to two projects – “Centennial of Latvian Foreign Policy: Retrospect and Future Prospects” and “Latvian Security and Foreign Policy Yearbook 2017”. Furthermore, EUR 50,000 will be allocated to the Imants Ziedonis Museum, EUR 343,000 – for the maintenance of the Ventspils University College Irbene Radio Telescope and EUR 80,000 – to establish two high performance computer labs at Rēzekne Higher Education Institution.
Furthermore, the Saeima supported the proposal to grant almost EUR 40,000 to the Social Fund of Latvian Olympians and EUR 467,000 for the continuation of filming the movie “Dvēseļu putenis” (The Blizzard of Souls).
Resources have also been allotted for the renovation, reconstruction and maintenance of several churches and cathedrals, including EUR 215,000 intended for the Basilica of Aglona.
EUR 22,000 will be allocated for Arabic Language and Culture studies at the Department of Asian Studies of the Faculty of Humanities at the University of Latvia, while EUR 243,000 will be granted to the Latvian Radio Big Band. EUR 50,000 will be used to finance the position of the Latvian Radio Brussels correspondent, while EUR 300,000 have been earmarked for the World Bank study on Latvia’s tax system.
The Saeima has also supported allocations of resources to various sports federations for their children’s and youth programmes, as well as for construction and reconstruction of several sports facilities, including EUR 952,000 for the construction of the Rēzekne Olympic Centre. The MPs also granted funding for building children’s playgrounds and sports grounds in several municipalities, as well as for purchasing interactive whiteboards and developing teaching materials for several schools.
Next year’s budget also provides funding for salary increases for the members of the Cabinet of Ministers, parliamentary secretaries, as well as the heads of Saeima committees and parliamentary groups.
In the final reading of the budget for 2016 the Saeima examined 1247 proposals altogether.
Saeima Press Service