5 important things in the future government coalition agreement: touch the wallets too Business

After analyzing the draft coalition agreement, 15 minutes calls for attention to five key points.

1. Costs will increase, but little?

Until we see the future government program, it is difficult to fully estimate exactly how much public spending on new initiatives will increase over the next four years.

However, indications can be seen in the coalition agreement.

The programs of all the coalition parties showed that costs would increase.

The funds will be required by the promise that teacher salaries must reach at least 130 percent. average salary in the country, and 150 percent of academic staff.

The commitment to implement the National Defense Agreement will also increase costs, as it provides for increased funding for national defense.

It also promises to invest up to 1.5% in research and experimental development (R&D) by 2024. GDP compared to 0.9% today.

Without disclosing specific plans to future rulers, it is not possible to estimate how much these three liabilities will cost the state, but the required amount could be in the hundreds of millions of euros.

“The programs of all the parties participating in the coalition showed that the costs would increase. “They all promised to raise teacher salaries, the Liberals promised more attention to R&D, and the Conservatives essentially promised to respond to President Gitan Nausėda’s desire to substantially increase redistribution through the budget.” 15 minutes said financial analyst Marius Dubnikov.

According to him, although vague, the coalition agreement shows the priorities of the center-right to review economic stimulus plans and allocate funds to economic transformation, as well as to ensure that public sector employees who receive salaries from the state budget receive higher income .

Sigismund Mauricas, Economist at Luminor Bank 15 minutes He also said that he saw the desire of the future government to “fence more.”

However, according to him, the treaty shows that the government will plan spending cautiously, unlike a large number of European Union (EU) countries, which actively seize the opportunity to borrow huge sums of money during the economic crisis. coronavir.

This would be demonstrated by the commitment in the coalition agreement not to make “reckless” decisions on consumer spending, which significantly increased public debt during the COVID-19 pandemic.

“I think many countries will pick up on that banana when they see that they can borrow and spend during the crisis and they will not go back to pre-crisis levels.” This will have long-term consequences, as they will have to tighten their belts or increase taxes, “said the expert.

And those countries that do not exaggerate their wishes and do not know more than they can, will be treated as more sustainable economies. Lithuania may be one of them, “he added.

It is true that future public spending should also be driven by the promise to combat climate change, including the development of a circular economy.

2. What taxes will increase?

It seems that even if the new government introduces more drastic fiscal changes, it will not do so suddenly.

The coalition agreement stipulates that changes to the tax system will only be considered once the scope of public sector commitments within the coalition has been agreed.

There really is a strong liberal blow to this treaty.

In the document, however, we can see indications of what the government’s fiscal policy will be.

Governors promise to adhere to the provision that labor taxes must not be increased. In addition, the new government intends to modify the corporate income tax by waiving taxation of reinvested earnings.

This basically shows that the new government will not raise taxes on labor or capital, economists say.

“There is a strong liberal coup in this deal,” Mauric said.

“Conservatives are likely to set the ultimate goal of properly spending local and EU funds on economic transformation. “They will take care of how to spend the money, and the liberals will take care of how not to tax what they don’t want,” he said.

According to the expert, the future government should expect further growth in taxes on property, consumption and the environment. According to him, the revenues from these taxes could finance relatively modest liabilities, the implementation of which will require increased costs.

He also claims that conservatives appear to have abandoned the ambition to raise taxes further to increase funding for public services.

“I was a little surprised by that, because conservatives have repeatedly emphasized the need to increase redistribution to move further towards the welfare state model,” Maurice said.

Nor is it known from the coalition agreement if the rulers intend to reduce the Personal Income Tax (PIT) that both liberal parties of the coalition seek.

“In the agreement, we see the liberal desire to introduce a zero rate for reinvested earnings, and we do not see a reduction in the GPM. It is obvious that no agreement has been reached on this,” said analyst M. Dubnikov.

Viktorija Čmilytė-Nielsen, the president of the Liberal Movement, has not yet given up hope for a lower GPM.

“We are rational and we understand that we must first assess the objective situation. Decisions will largely depend on the further spread of the pandemic.” 15 minutes said the politician.

“It just came to our attention then.” We will continue with what we have written, but we are not blind in assessing the circumstances, “he added.

Both the Liberal Movement and the Freedom Party were determined to cut the GPM to 15 percent in their electoral programs.

3. A reform that will make life easier for companies

The coalition agreement states that the coalition partners will implement the reform of corporate oversight institutions, reducing bureaucracy and excessive regulation of companies.

The parties plan to reorganize the supervisory authorities so that their objectives are “in the public interest and not the establishment of bureaucracy.”

We want corporate oversight bodies to be consultants, not punishments.

The Treaty promises to redefine the objectives of public authorities so that they can guarantee the public good without stifling the private initiatives that society needs.

It also lists the institutions where the changes will be made first, the National Land Service, the State Inspectorate for Spatial Planning and Construction, the Department of Cultural Heritage and the National Center for Public Health.

“We want the institutions that oversee business to be not punishers, but consultants,” said A. Armonaitė, president of the Freedom Party.

V.Čmilytė-Nielsen, the leader of another liberal party, speaks similarly.

“I think it is clear which direction we want to take,” said the politician. “I am confident that in those key areas of private initiative and business, we will make significant progress over what has happened in the last four years.”

A. Armonaitė stated that there are many examples in municipalities where the cooperation of the supervisory authorities with the companies is extremely difficult, because they perceive their objectives in a strange way, and some of them are even foreseen by the law.

The politician highlights the National Land Service.

“NJT must not be a blocking instrument for investments in cities, it must not be a brake on the opening of new factories in Lithuania,” said A. Armonaitė.

According to her, a lot of work in the organization of the activities of the institutions can be done in the Government itself, formulating goals and demanding certain results.

4. Boycott of Astravo

The coalition agreement promised “an absolute blockade of the unsafe Astrava nuclear power plant.” It has been agreed by the three Baltic countries.

This point is not too surprising, but in the context of recent events, it is much more important what concrete steps are promised to make this happen. Several politicians involved in the coalition negotiations. 15 minutes confirmed that that detail has not yet been discussed.

The conservatives who make up the government have many criticisms of the methodology of the Baltic electricity trade with third countries agreed upon by the outgoing Minister of Energy Žygimantas Vaičiūnas, according to which Astravas would move to the Latvia-Russia connection after stopping the trade through of the Lithuania-Belarus connection.

They say that the Baltic states must trade electricity with third countries through the connection of the Lithuanian-Königsberg region, as envisaged in the methodology agreed in 2018 and according to them it is still valid. According to conservatives, the 2020 consensus is invalid because it has not yet been approved by the Lithuanian State Energy Regulatory Council.

Despite all this, when the Astrava nuclear power plant began generating electricity on Tuesday, Latvia began operating on its connection with Russia on Thursday.

Conservative Žygimantas Pavilionis, meanwhile, spoke about the consequences for Latvia, but did not elaborate on what.

“We have discussed the various political, diplomatic, economic and technical consequences, but we will be able to make them concrete while we are in power.” 15 minutes said the parliamentarian.

Conservatives are skeptical about the possibility of Latvians trading electricity with Russia because they do not trust Moscow to provide reliable guarantees that it is selling energy that is not actually bought from Belarus.

For its part, Lithuania seeks a boycott of Belarusian electricity on a regional scale so that the Astrava nuclear power plant does not bear fruit economically. Vilnius considers the construction of the power plant unsafe.

5. Give surems throws

The coalition agreement reached is an important advance in the center-right negotiations, but initiatives to take concrete steps to implement the proposed changes will still receive support during the negotiations on the government’s program.

This is evidenced in the writing of Conservative leader Gabriel Landsberg. 15 minutes sent a laconic comment where he did not reveal specific plans behind more declarative clauses in the contract.

“All of this will be discussed in the government program, which we are beginning to prepare. This is a coalition program, so we cannot unilaterally decide on concrete actions. The position of future ministers is also needed ”, said the parliamentarian.

The new Seimas will be sworn in next week. The center-right coalition will have 74 votes in parliament.