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On Thursday, 15 December, the Saeima adopted in the final reading the Law on the State Budget for 2012 and amendments to 29 budget-related laws.

“The state budget for 2012 was the last one to be drafted in cooperation with the international lenders, and it is a budget marking the stabilisation and growth of our financial system. Next year’s basic expenditures will see minimal cuts that will not affect pensions or salaries. It is planned to increase budget revenues by combating the shadow economy and smuggling of goods. It is significant that this Law will introduce the VAT reverse charge procedure, improve the supervision of gambling and lotteries, limit the excise-tax-free import of excisable goods, double the bank tax, as well as strengthen the administering of small enterprises and microenterprises,” noted Jānis Reirs, Chairman of the Budget and Finance (Taxation) Committee, which is responsible for the passage of the Draft Law.

It is planned that next year’s consolidated budget revenues will be in the amount of LVL 4.516 billion, and expenditures in the amount of LVL 4.641 billion. Earmarked subsidies for local governments are planned in the amount of LVL 210.7 million. Annual average inflation is estimated at 2.4% of GDP.

Budget consolidation will hardly affect taxes, and all the current tax rebates will also be retained. The monthly non-taxable part of personal income will remain the same as in 2011, i.e., LVL 45. Tax relief for a dependent person will be LVL 70 per month.

Various measures for consolidating the budget are aimed at fighting the shadow economy. In order to eradicate the so-called envelope salaries, more responsibility will be placed on employers and more severe fines will be imposed on them for failing to pay the full amount of the personal income tax or mandatory state social insurance contributions.

It is also planned to curb the illegal circulation of cigarettes and alcohol by allowing inhabitants of border areas not more than once a week to import cigarettes, alcohol and other excisable goods from third countries without paying excise tax if these goods are intended for their own consumption. Until now, they were allowed to do so as often as once a day.

It is also planned to take measures against abuses of the microenterprise tax regime. Microenterprises that have no turnover during the entire calendar year will lose their status of microenterprise tax payer. Microenterprises that offer their employees for outsourcing, i.e., that provide personnel leasing services, will have to pay personal income tax.

Remuneration for employees of the public administration will remain unchanged. It is planned that in 2012 it will be possible to issue vacation benefits amounting to 25% of the total monthly salary to employees of state and municipal institutions. It is also provided that next year it will be possible to award bonuses to officials and employees working in institutions which implement measures to combat shadow economy.

In order to ensure fiscal consolidation of next year’s budget, the financial stability duty for banks has been increased. The rate has been raised from 0.036% to 0.072%.

Next year, municipalities will receive 80% of the personal income tax paid by inhabitants instead of the 82% they have received until now; the remaining 20% will go into the state budget, as opposed to the 18% it has received until now.

The Law on the State Budget for 2012 stipulates that maternity and paternity benefits will amount to 80% of the recipient’s average salary subject to social insurance contributions, as opposed to the 100% that has been issued until now.

The envisioned Medical Risk Fund will not be set up next year, and it is planned that issuance of compensation for damage to a patient’s health or life, as well as for moral damages will begin as of 1 July 2013.

Today the Saeima supported allocation of LVL 80,000 for preparing and organising the 25th Latvian Song and 15th Dance Festival. Likewise, the Saeima voted in favour of allocating LVL 5,000 to the Latvian National Partisans’ Association, LVL 5,000 to the Latvian National Soldiers’ Association, and LVL 3,400 to the Latvian Association of Victims of Political Repression.

Taking into consideration that Riga will be the European Capital of Culture in 2014, the Saeima allocated LVL 282,000 to the Ministry of Culture for carrying out preparatory works next year pertaining to this important event.

Additional financing in the amount of almost LVL 34,000 was issued to the National Botanical Garden, almost LVL 8,000 – to the Constitutional Court, and LVL 236,000 – to the State Land Service.

“In December of this year, the international loan programme for Latvia will end. We will be able to take decisions on the budget for 2013 on our own, and it will be a budget for our development and financial independence,” emphasised Jānis Reirs.


Saeima Press service