RIGA — Finance Minister Einars Repše has sacked Latvia’s chief tax collector for insubordination, ending an ongoing saga since the new government was installed in March this year.

The sacking could have repercussions, according to a report by the LETA agency, as several lawmakers are claiming that Repše’s move could lead to either his own resignation or, even worse, the collapse of the government after next year’s budget is passed.

“Repše’s crossed the red line,” the agency quoted the unnamed lawmaker as saying.

Repše’s patience ended after State Revenue Service head Dzintars Jakāns twice refused to hold a competition for the position of deputy chief of the service. Instead, Jakāns had appointed Vladimirs Vaškevičs, who is accused of concealing income, to the post.

“It is not acceptable that the State Revenue Service general director systematically and consciously ignore the minister’s directives, thereby delaying the process of reorganizing the service,” Repše said in a statement, adding the Latvia’s taxpayers suffered as a result. Jakāns will have to Oct. 29 to defend his actions, according to the statement.

Tensions between the minister and the chief collection agency have escalated over recent weeks for numerous reasons. Last week Repše punished Jakāns for insubordination by slashing his salary 20 percent for six months. Strategically, Repše wants to overhaul the revenue service and transform it into a more compact agency that will focus on large taxpayers and spend less time regulating small enterprises.

Jakāns resisted the change, which would have seen as many as 1,500 employees laid off, particularly since tax avoidance is increasing now that Latvia’s economy is in deep crisis and more people are losing their jobs. Jakāns said any structural change in the service should be drafted by professionals, not politicians. Furthermore, crisis conditions dictate the need for a strong revenue service, Jakāns argued.

“If the tax base is increasing and social guarantees are decreased, then that will facilitate tax dodging. If we consider the cutbacks in human resources and salaries at the state revenue service, then the overall picture is rather bleak,” Jakāns told Neatkarīgā Rītas Avize earlier this week.

In regards to Vaškevičs, Jakāns refused to sack him “even if there were orders to do so,” he said. “I’m not going to fire one employee of the revenue service just because someone is spreading rumors and nonsense.”

The implications for the government are unclear, but could be severe. According to one report, Jakāns is a member of the People’s Party, a long-time rival of Repše’s new era. Given recent indications that the People’s Party is attempting to take control of the government, Jakāns’ dismissal could provide another argument for the party, the largest in the four-party coalition, to pull out.