In the current situation, the Association of Regional Development Centers (RACA) cannot support the draft state budget for 2021 and the planned tax changes, RACA adviser Rolands Pētersons said.
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The association explained that the planned reduction of the municipal share of personal income tax revenues from 80% to 75% in combination with a number of additional expenditures related to the planned minimum wage, pre-school teacher salary, guaranteed minimum income and housing benefit and other measures could significantly affect the municipality. ability to perform their statutory functions.
The organization is particularly concerned about the future fate of ongoing and planned investment projects, as the European Union’s next multiannual budget, as well as the so-called European Recovery Instrument, will be available in the foreseeable future.
“RACA members acknowledge that the planned changes in next year’s draft state budget may cause significant problems in the work of local governments. We will continue discussions with the Ministry of Finance (MoF) and invite Prime Minister Krišjānis Kariņš (JV) to discuss our position with concrete figures. , “said Vents Armands Krauklis (Vidzeme Party), Chairman of the Board of RACA and Chairman of Valka County Council.
The organization representing the local government considers that it is necessary to make changes in the draft state budget prepared by the Ministry of Finance, providing local governments with appropriate compensation for reducing their revenue base and increasing expenditures.
It has already been reported that last week the National Tripartite Cooperation Council, which forms the government and the social partners, conceptually agreed on the 2021 draft budget.
From the information provided at the meeting, it appears that in 2021 additional funding of 183 million euros was offered to the health sector, thus fulfilling the state funding provided for in the Health Care Financing Law to increase the salaries of health care employees.
In the field of education, an increase in teachers’ salaries is envisaged in pre-school education for 5-6 year olds, general education, vocational education, as well as in vocational orientation and interest education, it is proposed to allocate an additional 33.3 million euros in 2021 and 49.1 million euros in 2022 and in the coming years. Also, for the increase of the minimum remuneration rates for the academic staff, a proposal for financing 7.2 million has been submitted both in 2021 and in the following years.
The Ministry of Finance informed that everyone should be involved in the creation of budget funds in solidarity, including local governments, which currently have a surplus in their budget, while the state budget has a deficit. If in the seven months of this year the deficit of the state basic budget is 115.1 million euros, then the local government budget has a surplus of 95 million euros, which is at the level of last year. In the medium term, a deficit is planned in the local government budget, as in the state basic budget, however, the level of the deficit in local governments will be significantly lower than in the state basic budget.