The President is against increasing the VAT to finance defense, unless there is a relief for food

He spoke as politicians debated the possibility of introducing a so-called defense tax by increasing some of the existing tax rates.

Specific proposals have not yet been registered, but politicians are considering that, for example, VAT or corporate tax rates could be increased to increase the financing of national defense.

According to the president, the public may be annoyed by talk about new taxes in the context of the tax reform stuck in the Seimas.

“It is now in this context to talk again about the introduction of separate taxes, even more so such as, for example, the introduction of VAT, means to annoy the people of Lithuania again with separate proposals taken out of context, even with the best of intentions”, – LRT TV show “Dienos Tema” on Wednesday said the head of the country.

“It is not good and it certainly does not serve the general peace and stability, especially the stability of the society,” he added.

According to the president’s advisor Frederiks Jansons, due to the higher VAT, the tax burden would also increase for the most difficult Lithuanian residents, so Mr. Nausėda would support the increase in the rate for defense purposes only if more VAT benefits were introduced at the same time.

“Since VAT is a regressive tax and its increase would be felt most painfully by the poorest residents of the country, without additional solutions, such as VAT relief for food or other important goods, the president will not support increasing VAT for defense purposes,” F. Janson told BNS.

The government proposes to allocate 2.75 percent of the gross domestic product (GDP) to defense next year. About 2.52 percent. GDP will consist of stably allocated budget funds, the remaining amount will be a temporary solidarity contribution from banks and borrowed funds.

The standard VAT rate in Lithuania is 21%, the preferential rates of 5% and 9% are applied to various goods or services. tariffs.