G. Skaist: Partial Tax Relief Available in Spring

The text was supplemented with comments on the topics discussed in the meeting of the President with the Minister.

On Friday, Skaist met with President Gitan Nausda. After the meeting, it was reported that the public financial situation and plans to improve the equity of the tax system were discussed.

Expected budget adjustments

Simon Krpta, Senior Advisor to the President on Economic and Social Policy, pointed out that due to the difficult situation of the pandemic, there are no preconditions for a budget other than the one approved now. 2021 The budget projects a general government deficit of 7% of gross domestic product (GDP) and a public debt that will increase to 52% of GDP.

The larger budget deficit is mainly due to additional expenses to manage the coronavirus pandemic. Government revenue is projected to reach $ 11.25 billion. € 15.83 billion in credits, and the budget deficit will reach € 4.57 billion. EUR.

The budget is based on a GDP growth of 2.8% per year.

At the same time, the advisor emphasized that we only have the beginning of the year, and budget adjustments are planned in the course of this year, taking into account changes in the situation.

Lose everything

According to S. Krpta, during the meeting much attention was paid to the project started to increase tax justice.

What tax benefits could be abolished is not yet detailed. In its program, the government only mentions more specifically that the abolition of fossil fuels is planned.

After the meeting, G. Skaist told reporters that the Ministry of Finance and the State Tax Inspectorate will work together to review absolutely all existing tax benefits, realize catastrophic benefits.

Some of the benefits may not make sense and it would be fairer to allocate targeted subsidies. He could not eliminate one or the other benefit now, everything would fall apart, he said.

Any tax changes are expected to be discussed not only at the expert level but also with the public.

According to the minister, already in the spring session of the Seimas it is planned to present certain proposals related to the preferential perira. It is planned to consider and decide on them in the middle of the year, so that the changes take effect one month from next year.

Substantial EPA Reform May Come Later

journalists asked G. Skaists about plans for a reform of the GPM. The government program contemplates a change in the procedure to calculate the GPM during the next four years of the term, applying the tax rate not to an individual but to a family.

The finance minister acknowledged that this issue is not, at least for the moment, a priority.

Now the main work is the benefits, and the next would be the second, which will be discussed and decided later. Some other practices show, and experts point out, that such a transformation also creates additional problems, such as incentives to be out of work. Therefore, such a reform of the EPA is certainly a topic for a broader and deeper discussion, he noted.

G. Nausda is also quoted in the President’s press release on the meeting with the Minister of Finance: We can strengthen trust in the state and government institutions only by creating a fairer division of the fiscal note without unjustified fiscal inequality and tax evasion .

According to the President, at present income taxes depend too much on the form of activity and too little on the amount of income, therefore, one must rely on the principles of equity, precision and adequacy when rewriting all the provisions for the application of tax relief.

As an example, G. Nausda presented the concept of the Income Tax Amendment, which is being initiated, which aims to accelerate the growth of wages of Lithuanian residents and get closer to the standard of Western European countries. Currently, the country’s development level is 80% of the average level, but wages are only 60%. According to the president, the gap can be changed by changing and investing not only in technology or infrastructure, but also in the biggest assets of the Lithuanian economy, according to the report.

An elite exchange plan is being prepared

During the president’s conversation with the minister, anti-EU measures were discussed as one of the key sources to change the possible financial deficit.

According to the president’s announcement, G. Nausda called on the company and creative measures to recover the English portion of state finances.

2019 According to the Schneider study, the eli in Lithuania is one third higher than the European Union average. The International Monetary Fund estimates that if the EU reaches the EU average, the budget would be around 5% of GDP (or more than € 2 billion).

Skaist said the Finance Ministry will come up with a new transition plan, although implementation could be delayed after the pandemic.

According to the president, in the conversation it was agreed that one of the first priorities in the new electricity exchange plan will be the analysis of the decision to implement the construction license.

It was reported that other issues were discussed at the meeting, including the investment plans of the EU Economic Recovery Fund, which Lithuania must present to Brussels before April, as well as the establishment of the National Development Fund, which would finance investments leading to the transformation of the economic model. The President supports the Government’s plans to establish such a Fund after evaluating the possibility of merging the existing national development agencies, Viej Investment Development Agencies, Invega, and the Agricultural Loan Guarantee Fund.

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