Latvia’s economy lacks investments in the amount of 2-3 billion euros, Minister of Economy Viktors Valainis (ZZS) said in an interview with Latvian Television (LTV) program “Morning Panorama” on Friday.
He noted that what was expressed in the latest economic review of the Organization for Economic Co-operation and Development (OECD) presented this week on Latvia largely coincides with what is currently being implemented in Latvia. “The recommendations that come from the OECD are also on our agenda,” said the minister.
Valainis also mentioned that the Latvian economy lacks investments in the amount of 2-3 billion euros, so it is primarily necessary to develop the capital market. “The amount of investment that is missing from our economy is not five, ten or 100 million euros, it is 2-3 billion,” he said, adding that such an inflow of financial resources can only be achieved by seriously reviewing the way the Latvian economy is financed. and the development of the capital market is one of the prerequisites.
Also, the minister noted what was stated in the OECD report, that the tax burden on low-wage earners in Latvia is too high, and also expressed that the government is determined to find a solution so that the labor tax burden on low wages in Latvia is reduced, that is, in Latvia, work is currently being done on labor tax reduction models.
“People are unable to pay such a tax burden, thus a shadow economy is formed,” said Valainis, adding that Latvia is not competitive in the field of labor taxes at the Baltic level, including especially in the salary group up to 2,000 euros.
It has already been announced that the latest OECD report emphasized the need to reform the tax system. On the other hand, it was highlighted as the main problem that high social contributions for people with low and medium incomes reduce the desire to formalize employment relations. Informal employment relationships are common and personal income tax progressivity remains low. To address these problems, the OECD recommends reducing the labor tax burden on the low-income, for example by reducing social insurance contributions for lower incomes or by increasing the progressivity of personal income taxes.
