- 20% cut in all public sector salaries (on top of earlier 15-35% cuts);
- VAT increase from 21% to 23%;
- introduction of progressive income tax, starting with income of 300 lats/month (430 euros/month!) which would be taxed at 29% (instead of current 23%) plus the social security tax;
- the income tax on incomes above 800 lats/month (1150 euros/month) would increase from 23% to 40% (also not including the social security tax);
- many smaller cuts and tax increases.
The second, yesterday:
- no tax increases, except for alcohol tax, but
- 40% cut in public sector salaries (on top of earlier 15-35% cuts);
- 10% cut in retirement benefits;
- many smaller cuts.
Either way, it's crazy. Crazy tax increases or crazy salary cuts.
And the craziest of all things. Either of those two proposals only brings Latvia to a budget deficit of 5-6% of GDP. Next year, more cuts or tax increases will be needed. Can a country run out of salaries to cut or taxes to increase?