Advisor to the President: Insurance tax should not apply to primary residence | Business

According to him, a more socially just model of the so-called security contribution could be considered, for example by taxing residents with more wealth more.

“The model still lacks consideration of housing, access to housing. Housing affordability is difficult at the moment, people who have loans would have to take out additional insurance, which would cost them more. People who live in rural areas have wooden houses, there are other conditions where insurance is relevant: lightning, natural elements,” V. Augustinavičius told Žiniai Radio on Tuesday.

“The primary residence should not be subject to this insurance fee.” And it could be considered for other things that are not of the first necessity,” he emphasized.

The Ministry of Finance proposes to tax a part of the insurance contracts at 10 percent, allocating the income of this contribution to finance national defense.

According to V. Augustinavičius, residents with more assets should pay more of such a tax.

“If this tax model were more focused on making those (…) who have more assets and things to protect pay more and could pay more, and those with less assets to protect could pay less or not pay at all, then it would be more socially just,” said the president’s adviser.

According to him, the insurance tax, as proposed by the ministry, should not be paid for the civil insurance of drivers.

At the end of July, the Ministry of Finance submitted for public consideration the draft Law on Security Contribution, which provides for a 10% tax on part of the insurance contracts, when the contribution is paid from July 2025. The collected funds would go to the State Defense Fund and would be used for defense purposes. After receiving the conclusions, the project will be considered by the Government, and with its approval, the Seimas will make a final decision.

The Minister of Finance Gintarė Skaistė then said that she was confident that the project would be considered by the Government and presented to the Seimas in the fall.

The head of the Association of Insurers, Andrius Romanovskis, has said that such a contribution would tax responsible people insuring their property and could deter them from taking out insurance.