Non-conformity report regarding the draft legislation of the tax reform  17 July 2017

The Fiscal Discipline Council has identified a possible non-conformity with Section 9 of the Fiscal discipline law that could be rectified upon passing a new medium-term budget framework.

On 4 July and 11 July 2017 the Cabinet of Ministers, as part of implementing the proposed tax reform, passed and submitted to the Saeima on 13 July  several draft laws. Based on the estimated fiscal impact, the Council notes that the implementation of the tax reform in its current form would cause a deterioration of the approved budget balance in 2018 and 2019. The submission of draft legislation to the Saeima prior to commencing work on a new medium-term budget framework is not in compliance with Section 9 of the Fiscal discipline law.

In view of the above, the Council recommends that the fiscal impact of the tax reform be reviewed in the context of the Medium-term budget framework 2018/2020.