Another amendment was adopted to increase NPD: Lithuania feared to become Wild West

Vadino primary bug

The drafting of the Legislative Framework Law, when it could be ignored for 6 months. In May, President Gitanas Nausėda presented to Seimas, in addition to the problems solved at that time, the reduction of the personal income tax rate (PIT) and the increase of the NPD.

In the second half of June, the Seimas voted in favor of such a proposal.

It is true that LBAA President D. Čibirienė explained that this means that from now on, if there is an economic crisis in the country, it will be possible to adopt laws that increase taxes and that are no longer applied for 6 months. your effective date.

“Such a change for 6 months. Ignoring the term is terrible.

As far as there are reports, both the European Union (EU) and the OECD, from all angles, can tell us that the legislative system in our country, where legislation is changed so often and so often, is inadequate and must be administered. Even a good tax law has to be hit, it has to be debated, it has to be applied for a longer time. With us, the legislation is changed too often, we don’t even feel it is good or bad, they just change, “he said.

According to D. Čibirienė, another equally important thing is that 6 months. The term prior to the entry into force of the law was used more frequently not to prepare the company for tax changes, but to allow Seimas to adequately prepare the law.

“When the law is approved, it is with holes, with many errors and those 6 months. There was a scream from the media, and then Seimas members handled the law. We have a tradition of spending anything and seeing what happens, so was the tax reform, because then we changed all tariffs.

Now we are making a fundamental mistake. We have no experience and experience in developing orderly legislation and we have 6 months. the interval was not used for preparation, but for the creation of more or less fair legal acts, “he said, assuring that it would be worth discussing how many times during his tenure the Seimas can change the legislation related to the tax changes.

When asked if such a measure, when it is not mandatory to apply for 6 months. The deadline before the tax went into effect or changed, in the event of an economic downturn simply would not allow the situation in the country to react more quickly if necessary, said that the economic downturn in Lithuania could continue for 10 years, but this does not mean that the legislation can be changed.

“It means that in times of economic recession, we can always raise taxes without discussing them and without even having time to correct them. Then the Wild West comes out, and the shadow arises due to the unstable tax environment, because the taxpayer no longer knows how to calculate those taxes. ”, Clarified D. Čibirienė.

Raises questions

Antanas Bubnelis, adviser to President Gitanas Nausėda, confirmed that in this case the amendments to the law initiated by the Head of State were intended to provide a new clause for the entry into force of tax laws in the case of exceptional clauses such as COVID -19.

He clarified that exceptional circumstances are defined and identified as an unusual event beyond the control of public authorities and that has a significant impact on the financial position of the general government or a severe economic recession.

“The European Commission and the Council have stated that a COVID-19 virus pandemic can be considered an ‘unusual event beyond the control of the government’. The Regulation also foresees a severe economic recession in the event of a severe economic recession in the euro area or in the Union as a whole.

This administrative amendment seeks to establish the principle that countercyclical fiscal policies in times of economic crisis should include a proactive reduction of the tax burden on the population. At the same time, the President proposed specific solutions to reduce the PIT, of which the proposal to increase the NPD by 50 euros in the Seimas was approved and entered into force on July 1.

Without the Legislative Framework and the Tax Administration Laws mentioned above, it would not have been possible to reduce the tax burden on the population during the crisis, ”Delfi explained, adding that more than 90% will benefit from this tax change. employees.

True, according to D. Čibirienė, the authorities could have envisaged amendments to the Legislative Framework and the Tax Administration Law only in this case by increasing the NPD, but now the situation is completely different and the amendments for 6 months. the term is not related to future tax cuts but, on the contrary, to increases.

He explained that, for example, if taxes were reduced for taxpayers and the legislation went into effect despite the 6 months. the deadline and residents disagree with it, they can file a petition with the Constitutional Court, and he can say that the amendment of the legal act is illegal and can come into force only after 6 months. interval. But, according to her, when taxes are reduced, there is probably no such dispute, so it has more to do with increasing tax obligations.

“That’s why I say that those 6 months are only relevant for tax increases, since nobody will go to court due to the tax reduction.

Tax cuts do not require changes to the Legislative Framework Law. They opened Pandora’s box, “he said.

Mr Čibirienė also pointed out that, in terms of increasing the NPD, in this case the Law on Legislation will apply retroactively, although this legal act does not allow it to do so.

“The NPD will be changed retroactively from January 1, but why does nobody say that this is not the case with the Legislative Law? No one will protest or appeal to the Constitutional Court because it is a tax cut. Imagine that there is a retroactive increase in VAT, there would be a lot of noise here.

The fact that this was done due to the increased NPD is a cover, – said D. Čibirienė. – It’s actually an attempt to wrap, but something worse has been done under this cover. They could have said that the Legislative Framework Law is in force for 3 months, or an exception applies to the NPD change, but they did not say it, they said that they opened the Pandora’s box for everything. It’s very irresponsible if they don’t understand. “

Commenting on the situation regarding the change in tax law in general, A.Bubnelis agreed that non-crisis tax changes, especially those that suddenly increase tax obligations, are an unacceptable process for economic development. smooth and should be avoided.

“If necessary, additional provisions of the law can be enacted regarding the non-urgency of fiscal changes taking effect in times of economic recovery,” he said.

Povilauskas: I don’t think it’s abused

SEB banking economist Tadas Povilauskas stated that he had a slightly different opinion than D. Čibirienė.

In his opinion, the law has just demonstrated the advancement of the coronavirus and the state’s response to the stimulation of the economy, when fiscal legislation can take effect before 6 months. The benefits of the change, since the government, in his opinion, should be able to change the tax rates without having to wait six months or until a new state budget is approved in the event of a severe economic shock.

“Speed ​​is very important in such situations. I think that the chosen definition of the conditions so that the tax rates can be changed in exceptional circumstances, as defined in the Constitutional Law on the Implementation of the Fiscal Treaty of the Republic of Lithuania, is logical, because according to the same definition this year, the European Commission confirmed that exceptional circumstances Requirements of the Stability and Growth Pact.

Again, it is not so simple and easy for the Government to declare that only Lithuania has exceptional circumstances, so I do not believe that this clause of the law is abused, “he commented and gave the same example regarding the amount of NPD recently adjusted by government.

“As I understand it, it would be considered contrary to the Legislative Framework Law, which allows changing tax rates or benefits only for 6 months. After the law comes into force or only in conjunction with the State Budget Law.

Therefore, I do not criticize this change, and where, like most economists, we criticize when, in normal economic times, taxes change along with the national budget, when the final formulation of tax changes becomes apparent a few weeks before the new year. And here it may be worth debating whether the provision that the new taxes or their rates should be changed by introducing changes to the law along with the law on the approval of financial indicators of the state budget and municipal budgets should be removed; this would be a practice to meet the new taxes in the middle of the year. he.