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LATVIA Financial tools to maintain welfare society Slide 2 Agenda Participants in the project Country Latvia BA School of Business and Finance MEP IP project Ageing in Europe Slide 3 Slide 4 Participants: Laura Polovjanova Karna Galicka Sanita Gorbaova Linda ria Zane Zolmane Alna Sprengee Slide 5 Our country - Latvia: http://youtu.be/04A4GwxvwXQ Slide 6 BA School of Business and Finance(2): http://vimeo.com/59045323#at=0 Slide 7 Slide 8 IP MEP Ageing in Europe Financial tools to maintain welfare society Slide 9 Welfare Disability and illness Unemployed people Older and riterided people CareersFamilies and children Death related benefits Social welfare payments and work Supplementary Welfare Schemes Farming and fishing Education Extra social welfare benefits Slide 10 Tax system in Latvia Consolidated Budget Government budget Local government budget Gorvernment basic budget Local government basic budget Government special budget Local government specialbudget Slide 11 Tax Government basic budget Government special budget Local government budget Corporate income tax 100% Individual income tax 20%80% Real estate tax 100% The state social insurance payments 100% Value added tax 100% Slide 12 % Before working age Working age Retired people Natural increase 20081464,921,1-7 058 200914,165,220,7-8 220 201014,264,721,1-10 821 201114,264,221,6-9 900 201214,363,622,1-9 300 Slide 13 Taxes as a financial tool to maintain welfare in Latvia Personal income tax State mandatory social insurance payments Value added tax Real estate tax Slide 14 Personal income tax characteristics in Latvia An individual is liable for tax on his income as an employee as a self-employed person individual must meet the requirement of residence in Latvia Employer is obligated to deduct the amount of income tax and national insurance Slide 15 State Mandatory social insurance payments income gained by an employee a set of measures organised by the State Slide 16 Three-Tier Pension System in Latvia The First Pillar (state compulsory unfunded pension scheme); The Second Pillar (state funded pension scheme); The Third Pillar (private voluntary pension scheme). Slide 17 Devision between 1 st and 2 nd in budget Years1 st tier2 nd tier 2001 - 200618%2% 200716%4% 200812%8% 200918%2% 201018%2% 201118%2% 201218%2% no 01.01.201316%4% Slide 18 Slide 19 Insurance as a welfare instrument Slide 20 Population structure in Latvia by age groups in 2012 Slide 21 Natural increase in last 5 years Slide 22 Average age of life in Latvia by gender Slide 23 Participation of other organisations Local governments: Partial refund of the of money that has been spent for the medicine; Partially covered expenses for public utilities; Local communal apartments; Etc. Red Cross; Latvian Support Association for low-income people "DACE: To provide information about legal and social issues, To organise free cultural events, To arrange art exhibition of disabled children "The world around me. Slide 24 Conclusions Benefits are provided by Special government budget which is formed each year and it consists of contributions from pension insurance, dividends and other income; Latvians can improve their future pension with 3rd pension level or universal life insurance; Latvia has unarranged pension system; Pensions and benefits depend on paid in to a budget taxes; Slide 25 Conclusions (2) The negative natural increase and migration creates a negative impact on pension and benefit system of Latvia; Planned special budget cannot cover all needs on benefits and pensions; Local governments has been considered as an essential support to elder people; Low - income people receive help from non-profit organizations; People live with no vision about their future and old age. Slide 26 Suggestions People should choose Universal life insurance with savings and with attraction of funds; Government must motivate to pay taxes; System of paying pensions should be improved and labor must be educated; To improve birth rates country should provide well-prepared benefit system; We need to produce new generation to pay taxes for our future pension and different benefits; Slide 27 Thank You For Your Attention!!!! Paldies Par Uzmanibu!!!