Government presence is not prevalent in the economy, same as in other Baltic countries. Total government expenditure stands at 38% of GDP in 2015. The budget is still experiencing deficits, but the fiscal stance is broadly in line with the Euro-zone rules, with the government debt resting stable at 35% of GDP. Weak external position, due to a slowdown among trade partners, as well as prevailing geopolitical tensions, led to a decrease in economic growth, which was recorded at 2,7% of GDP in 2015. Legally, there are six joint companies that cannot be privatized, in sectors of energy and mining, transportation, postal services and forestry. Furthermore, the state still holds possession of two telecom companies and the air carrier. However, 20% of stocks of the Air Baltic were sold to
investors, but the introduction of a strategic investor was not successful. Private companies are able to compete with SOEs on the same terms and conditions in the market. The government has reviewed and rejected plan by the Privatization Agency for Liepavasmetalurgs steel plant that has been facing challenges since KVV acquired it in 2014. Possible further government involvement in this case is a pressing issue. Social transfers and government subsidies remain high. Lower government consumption than the EU average allows for lower level of taxation. Corporate income tax is set at 15%, while the standard and preferential rates of VAT are 21% and 12% respectively. However, the overall tax wedge on labour is high (44%), due to high social contributions (10,5% of the gross wage on behalf of the employee, and 23,59% on behalf of the employer) and flat personal income tax of 23%.