Latvians Asked To Kindly Stop Spending

Now here's some timely advice from a politician if ever I saw it:

RIGA - Prime Minister Aigars Kalvitis, speaking in a radio interview over the weekend, appealed to Latvians to do their part in bringing down inflation and stop spending so much money.

Kalvitis asked Latvians to be more thoughtful about borrowing money to buy big-ticket items, warning them that the future generation may be forced to foot the bill.

The prime minister, who is under pressure to cool down the overheating economy, reminded Latvians that inflation is triggered by, among other things, exuberant domestic demand.
His words, however, are likely to fall on deaf ears, as Latvians continue to enjoy the benefits of cheap money and access to property, cars and consumer durables.
The labor market is definitely working against the government after it was announced on May 31 that the average net monthly salary in the first quarter in Latvia rose 33.4 percent year-on-year to 257.35 lats (366.1 euros).
Gross monthly pay in Latvia grew 23 percent in the first quarter to 357.39 lats,
In the public sector, the monthly average net pay increased year-on-year by 35 percent, reaching 291.2 lats, while in the private sector it advanced 33.4 percent to 241.1 lats.

In Riga, the gross monthly pay in the first quarter was 407 lats, a 31.7 percent increase year-on-year.

The steepest – or 44.4 percent – year-on-year rise in average monthly gross salaries was in the electricity, gas and water supply industry, rising from 370.9 lats to 535.8 lats. The rise was due to irregular payments (regular gross pay increase is 29 percent), the statistics office said.
Given the sharp rise in salaries and high domestic consumption, the government on June 1 reiterated that it did not plan to decrease the personal income tax for now.

“With such high domestic consumption, the cutting the personal income tax is out of question,” said Kalvitis.

Finance Minister Oskars Spurdzins told the Baltic News Service earlier that the government could return to the question of reducing income tax no sooner than 2008.

The government decided in principle last year to reduce the income tax gradually within the next few years from the existing rate of 25 percent to 15 percent.