Kučinskis: By Tightening the Belt, We Can Manage

There will be no tax reforms at the moment, and tax increases are not necessary next year, said Finance Minister Māris Kučinskis (AS) in an interview with the LETA agency, who will lead the 'United List' faction in the new parliament.

'I think that by not expanding and tightening the belt, we can manage,' said the finance minister.

Asked whether this means that taxes will not be raised for the next four years, Kučinskis said that he is not talking about four years, but it will be necessary to assess how the new government will fare with reforms.

'If reforms do not progress due to resistance or the economy does not grow, money will have to be found somewhere. We are talking about expenses, but another salvation is economic growth. Currently, it is slightly above 2%, which is more than the European average. But it is not much. We should aim for 4%. When we achieve that, we can talk about stabilization,' said Kučinskis.

Asked about the value-added tax (VAT), Kučinskis said that it will definitely not be increased next year. 'After that, everything will depend on how we live next year, how we implement reforms, and how we fare with the economy. I will not give a guarantee for four years at the moment,' said the minister.

He explained that Latvia currently has a derogation regarding expenses for national security, and theoretically, it ends in 2030. At the same time, Kučinskis predicted that Brussels will still extend this derogation because, 'as long as there are beasts beyond the borders, Europe is unlikely to allow any country to be put in difficulty because it has to ensure its security.'

Kučinskis also reminded that the previous government reduced the tax burden on residents because it was a demand from entrepreneurs. This was compensated by reducing the contribution rate to the second pension level by one percentage point.

Photo: Agate Breijere, State Chancellery