Housing construction costs under governmental contracts tied to average wage

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April 22, 2016 18:51

The cost of housing construction per square metre within public procurement orders will be limited by the nominal average monthly wage value, multiplied by 1.2 on the commissioning date.

With this measure, the government aims to optimise social housing costs, since saved funds will remain at the customer’s disposal. Customers will be able to calculate their financial capabilities in terms of housing construction, the state will improve budget forecasting with regard to subsidised housing construction, and practices, when construction costs were recalculated during commissioning, will be eliminated. These new rules for subsidised housing construction will be actively used in the regions, due to lower construction cost.

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The Labour and the Tax Ministries are considering the possibility to include persons engaged in some economic activity without forming a legal entity in the social security system. When the decree No 337 comes into effect, the number of private entrepreneurs is likely to reduce due to the possibility of reducing the tax burden when switching to a tax payment as an individual. 95% of self-employed, including PE, pay insurance premiums on the basis of the minimum wage. The number of self-employed citizens is expected to increase, the number of insurance contributions to the pension system from PE will decrease, the number of citizens who will pay a fee to finance government spending will decrease by several tens. Self-employed citizens have the alternative not to pay social security fees and save resources for future pensions, which, given the gradual restriction by the state of pension requirements could be a more long-sighted option.

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