The State Is Reluctant to Share: Why Tax Benefits Are Stalling 0 14

However, it took less than an hour for me to send the authorities a report on my financial situation, and now I am waiting for the fiscal verdict on who owes whom...

Less Than Minimum

Meanwhile, the ceiling for justified expenses that Latvians can reclaim once a year from the taxes paid to the state has not changed since 2017, when it was generously raised to 600 euros. 10,584 citizens of the republic decided to remind the official authorities: "The queues for visits to state doctors and for examinations are very long, which forces many people to use paid medical services. Medical expenses for one person over the course of a year can often exceed a thousand euros significantly."

Therefore, a petition was submitted to the Saeima proposing to increase the reimbursable portion of health expenses to 1,500–1,700 euros: "Some people will not be afraid to use paid medical services, as they will know that they can reclaim more of the overpaid taxes, thus taking care of their health in a timely manner rather than potentially contributing to some long-term illness."

Laura Jauce, a representative of the petitioners, pointed out that the current ceiling for justified expenses is "disproportionate," especially since it also includes expenses for paid education.

Prices Are Rising. What About Incomes?

Janis Vucans, chairman of the Saeima Commission on Mandates, Ethics, and Statements from the Union of Greens and Farmers, recalled that he personally accepted the 600-euro threshold nine years ago. "Since then, the inflation rate in Latvia has been approximately 46%. In healthcare, this figure is 38%, and in outpatient care, it is 70%."

Ilmars Shnucins, Deputy State Secretary of the Ministry of Finance, noted that most of the reimbursable taxes will fall on the shoulders of municipalities, as people primarily pay income tax into local budgets. Today, from the specified amount, one can reclaim 153 euros back into the household budget. If the threshold is raised to 1,500 euros, then 383 euros will go into the wallet.

The current tax rates, according to I. Shnucins, are favorable for those earning less than 4,000 euros a month, as well as for pensioners. Speaking about the future, the Ministry of Finance, along with social partners, proposes to exempt interest-based education and donations from taxes.

By the way, it is worth giving credit to the SRS – they have a very active page on Facebook, where one can learn, for example, that every euro of taxes paid provides 36.8 cents for social protection, 14.3 cents for subsidies to municipalities, and 11.8 cents for national defense. As for the maintenance of the central government apparatus – the president, government, parliament, ministries – only 0.9 cents in total is spent.

Children Are Treated for Money

Janis Upenieks, parliamentary secretary of the Ministry of Finance, acknowledged that the procedure for calculating justified expenses is "administratively complex"; therefore, the ministry opts for a gradual increase of the non-taxable minimum. In this regard, Ginta Gruntmane, Deputy Director of the Tax Administration of the State Revenue Service, noted that difficulties arise when accounting for paper receipts, while electronic checks are accounted for instantly.

Peteris Leishkalns, an expert from the Latvian Confederation of Employers, reminded that until 2018, there were positions in the Republic of Latvia that had no threshold payments at all – for example, paid surgeries.

– The situation where children’s health services in Latvia need to be purchased for money is abnormal. This violates Article 3 of the Health Law, – emphasized P. Leishkalns.

He also highlighted the importance of compensating expenses for additional education – with new qualifications, people will bring more added value.

No Taxes – No Tax Benefits

The question of whether Latvia can afford additional benefits today, of course, depends on the budget balance. Representatives of the Ministry of Finance confirmed to parliamentarians that everything is fine with tax plan execution.

At the same time, the ministry of Arvils Aseradens notes that more money is spent on private medicine than is shown in declarations. Obviously, affluent people do not want to bother. Moreover, if a person receives a pension below the established threshold of the non-taxable minimum (from January 1, 2025 – 1,000 euros), they do not pay income tax; accordingly, they are also not entitled to tax benefits.

However, working pensioners can use the non-taxable minimum separately – 500 euros for the pension and 500 euros for the salary (when submitting an electronic tax book to the employer). If the book is with the State Social Insurance Agency, then the 1,000-euro non-taxable minimum applies to the pension, while the salary is taxed from the first euro, so to speak.

How Much Does It Cost to Raise a Champion

Deputy Cheslavs Batnya ("United List") emphasized sports – in hockey, which is essentially the national sport in Latvia, the hefty financial expenses fall squarely on the shoulders of parents, sometimes up to 500 euros a month!

Secretary of the Commission on Mandates, Ethics, and Statements Raivis Dzintars (National Alliance) said:

– Speaking about the further course of the initiative, there is no doubt that it will be submitted to the commissions for consideration, such is the practice. But if we talk about real forecasts, I am quite pessimistic, assessing the signals from the Ministry of Finance. Mr. Upenieks mentioned "other solutions," such as raising the non-taxable minimum... But I would urge not to view this as an alternative. This is a completely separate targeted initiative to support taxpayers.

"Voting Machine"

Tax discounts are investments by people in healthcare and education. An increase in the minimum is necessary; otherwise, the situation will worsen. The amount of increase, believes opposition deputy R. Dzintars, should be "proportional" to inflation rates!

– I support the transfer to the Budget Commission, – said the politician, – At the same time, I urge everyone, especially representatives of the ruling parties, to be active in their factions.

In practice, Mr. Dzintars believes that the Saeima Commission on Budget and Finance (taxes) sometimes works like a "voting machine." Therefore, to ensure that this important initiative is not buried, it should also be submitted to the Saeima Commission on Education, Science, and Culture, "which will be more interested."

However, in the end, the petition was only forwarded to the Budget Commission – and the responsible rapporteur was appointed Leila Rasima ("Progressives"), who is also the chairperson of the Commission on Human Rights and Social Affairs. By the way, the right to health protection and education – what could be more fundamental?