The Minister of Finance announced that spending cuts of approx. Ke 9.3 billion are necessary to reach a balanced state budget in 1996.
This fact has several impacts in the area of taxes. For example, the Financial Authorities will be forced to perform more tax audits to reveal tax evaders and consequently to increase tax revenues of the state budget. The Financial Authorities audits are planned, for instance, on individuals who do not pay tax on earnings from securities transactions. It was also announced that the tax rate reduction proposed in the first half of this year will have to be reconsidered.
In connection with the proposed spending cuts, the Ministry of Finance gave assurance that there are no plans to amend the provision exempting of capital gains on securities trades from tax if the securities are held for three months or longer by individuals, even though the provision was approved when the state budget was in surplus.
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