“This transfer (of tax changes – BNS) only opens the possibility, if favorable circumstances arise, to have the opportunity to consider these issues in the Seimas. (…) The issue will definitely not be forced until the elections, so that it does not really become some kind of political hostage drama and the air shakes unnecessarily (it should not happen – BNS)”, said M. Lingė to LRT radio on Tuesday.
“But the Seimas will work until the middle of November, so it is possible that even at that post-election stage, these issues can take on a more constructive nature of discussion,” added the chairman of the Seimas BFK.
According to M. Lingė, since the tax reform is related to obligations to receive funds from the European Union’s (EU) Economic Recovery and Resilience Plan (RRF), “it would be irresponsible” not to seek to implement the reforms and not receive European subsidies.
Social Democrat member of the Seimas, Gintautas Paluckas, during the debate on tax changes, urged the ruling party to “find a common language” with the opposition.
“Without any drama, it may happen that the issue of the tax system will move to the Seimas of the next term,” G. Paluckas told LRT radio.
“This is related to RRF funds. Next year, six payment requests are expected to be submitted to the European Commission, and these are hundreds of millions of euros. If those funds do not fall into the country’s budget, either we will have a lower flow of money into the economy, or we will have to come up with an alternative source of money to cover those costs,” he added.
Aušrinė Norkienė, an elder of the Lithuanian Peasants and Greens Union (LVŽS) faction in the parliament, said that “discussion is logical”, but decisions on taxes will have to be made by the Seimas of the next term.
“I really hope that we will not really complicate this session with pre-election mood. (…) I hope that we will not overshadow real work and that the same issue of taxes will not dominate this session”, A. Norkienė told LRT radio.
The news portal “15min” announced last week that the work program approved by the Government on August 28 included a package of tax revision projects, which proposed to reconsider benefits and other special conditions, make the tax system more efficient, increase the financial independence of municipalities, reduce inequality, and promote advanced investments.
The Ministry of Finance told “15min” that the tax reform package has passed the stage of submission to the Seimas, and its inclusion in the work program of the session provides an opportunity for the parliament to consider it “at its convenient time”.
The government presented the package of tax changes a year ago, but it never reached the stage of adoption in the Seimas without receiving support from the opposition and because the ruling party – conservatives, liberals and “liberals” – quarreled over the reform.
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#Lingė #issue #tax #reform #pushed #elections #Seimas #Business
2024-09-11 15:59:34
Table of Contents
Lithuania’s Tax Reform: A Comprehensive Overview
Lithuania’s tax system has been a topic of discussion for quite some time, with various stakeholders pushing for reforms to make the system more efficient and reduce inequality. The latest developments in the country’s tax reform saga have sparked intense debate, with politicians and experts weighing in on the proposed changes.
Background
The Lithuanian government presented a package of tax changes a year ago, aimed at reconsidering benefits and special conditions, increasing the financial independence of municipalities, reducing inequality, and promoting advanced investments [[3]]. However, the reform package failed to gain traction in the Seimas, the country’s parliament, due to opposition from various parties and disagreements within the ruling party.
Current Developments
Recently, the Bank of Lithuania proposed eliminating the reduced 5% income tax rate and applying a uniform tax rate of 15% to all corporates [[1]]. This move is seen as a step towards simplifying the tax system and increasing revenue. Additionally, the Lithuanian Parliament has given initial approval for a tax reform that includes an 11% tax credit for taxable income up to EUR 20,000, which will gradually decrease to 0% for taxable income between EUR 20,000 and EUR 35,000 [[3]].
Challenges and Concerns
The current tax system in Lithuania has been criticized for being complex and burdensome, with progressive tax rates of 20% and 32% applying to workers’ wages [[2]]. The system has also been accused of promoting inequality and hindering economic growth. The proposed reforms aim to address these concerns, but there are still concerns about the impact on businesses and individuals.
Political Implications
The tax reform package has become a political hot potato, with politicians from different parties weighing in on the issue. The ruling party has been criticized for not pushing the reforms hard enough, while the opposition has called for a more comprehensive approach to tax reform. With elections looming, the issue of tax reform is likely to become a key campaign topic.
Way Forward
The Seimas has until the middle of November to consider the tax reform package, and it remains to be seen whether a consensus can be reached on the proposed changes. The European Union’s Economic Recovery and Resilience Plan (RRF) has also added pressure on the government to implement the reforms and secure EU funding. As one politician noted, it would be “irresponsible” not to seek to implement the reforms and risk losing out on EU subsidies.
Lithuania’s tax reform is a complex and contentious issue that requires careful consideration and debate. The proposed changes aim to simplify the tax system, reduce inequality, and promote economic growth, but there are still concerns about the impact on businesses and individuals. As the country heads into an election year, the issue of tax reform is likely to remain at the forefront of political debate.
Sources:
[1] Bank of Lithuania. (n.d.). Bank of Lithuania presents position regarding tax and pension system reform. Retrieved from
[2] World Bank. (2023). Understanding the challenges of Lithuania’s tax system. Retrieved from
[3] Orbitax. (2023). Lithuanian Parliament Gives Initial Approval for Tax Reform. Retrieved from
Taxes in Lithuania for foreigners
Lithuania’s Tax Reform: Challenges and Opportunities
As Lithuania’s government prepares for the upcoming elections, the country’s tax reform has become a topic of discussion among politicians and experts. The European Union’s (EU) Economic Recovery and Resilience Plan (RRF) has provided an opportunity for Lithuania to receive significant funding, but the country’s tax system needs to be reformed to meet the EU’s requirements. In this article, we will explore the challenges and opportunities associated with Lithuania’s tax reform.
The Current State of Lithuania’s Tax System
Lithuania’s tax system has been a subject of concern for some time. The country’s tax rates are progressive, with workers facing a schedule of 20% and 32% on their wages, with a minimum non-taxable allowance [[3]]. This complexity has led to a burden on taxpayers and the government, making it essential to reform the system.
The European Union’s Recovery and Resilience Facility (RRF)
The EU’s RRF has provided Lithuania with an opportunity to receive significant funding to support its economic recovery and growth. However, the EU has frozen 8.7 million euros out of the 26-million-euro subsidy due to Lithuania’s unambitious tax reform [[1]]. This move has put pressure on the government to implement meaningful reforms to unlock the remaining funds.
Reform Support from the European Commission
The European Commission has pledged to support Lithuania’s reforms in areas such as governance and public administration, financial sector, health, and sustainable growth [[2]]. This support is crucial in helping Lithuania address its tax reform challenges and unlock the RRF funds.
The Government’s Tax Reform Package
The Lithuanian government has presented a package of tax changes, which aims to reconsider benefits and other special conditions, make the tax system more efficient, increase the financial independence of municipalities, reduce inequality, and promote advanced investments [[4]]. However, the package has yet to be adopted by the Seimas, the country’s parliament, due to a lack of support from the opposition and internal disagreements within the ruling party.
The Need for a Constructive Discussion
Politicians and experts agree that a constructive discussion is necessary to move forward with the tax reform. M. Lingė, the chairman of the Seimas BFK, has stated that it would be irresponsible not to seek to implement the reforms and not receive European subsidies [[4]]. Social Democrat member of the Seimas, Gintautas Paluckas, has urged the ruling party to “find a common language” with the opposition to move forward with the reforms [[4]].
The Importance of Implementing Tax Reforms
Implementing tax reforms is crucial for Lithuania to receive the RRF funds and boost its economy. The government’s tax reform package has the potential to increase the financial independence of municipalities, reduce inequality, and promote advanced investments. Failure to implement these reforms could lead to a lower flow of money into the economy, forcing the government to find alternative sources of funding [[4]].
Conclusion
Lithuania’s tax reform is a complex and challenging issue that requires a constructive discussion among politicians and experts. The EU’s RRF has provided an opportunity for Lithuania to receive significant funding, but the country’s tax system needs to be reformed to meet the EU’s requirements. Implementing meaningful tax reforms will not only unlock the RRF funds but also boost Lithuania’s economy and promote sustainable growth.
