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Economists interviewed by tv3.lt mention that after the change of government certain changes can be expected in the field of taxes, freedoms and personal rights. But they also warn that some changes could become a serious challenge and recall the economic crisis of more than a decade ago.
Liberal support and lower taxes
Swedbank chief economist Nerijus Mačiulis is cautious about possible changes, because only after the second round of elections will it be clearer whether a more center-left or center-right government will be formed.
“But after the first round, we see a very strong public position that we want more liberal economic policies. It’s about less regulation, fewer bans, more personal freedoms, and probably lower taxes or lower, more uniform tax burdens.
At least this is reflected in the record number of Seimas members representing the liberal parties. I think that regardless of which parties form the government, they should probably take into account that the desire for more liberal economic and social policies is becoming more pronounced, “said the economist.
According to him, even if the center-left government were to form again, he should look more carefully at tax increases, perhaps look for ways to cut some taxes, as well as rethink his plans for state capitalism.
“We just realized that there was a slight surprise in such strong support for liberal ideas. But is he. And here it is important to point out that he is not only on the economic front but also on the social front ”, commented N. Mačiulis.
According to him, the parties that received the most support are those who believe that many human freedoms are unduly restricted.
“For example, on issues such as the legalization of same-sex couples. It should be considered independently of the parties that form the government, since such ideas and promises were present in the programs of both left and right parties.
And Lithuania is one of the last advanced countries in the EU that does not allow the establishment of such associations. I think the indications are very clear, the electoral results are not boring, they must be taken into account by the government, regardless of which parties it is formed from, ”said N. Mačiulis.
Warns of night tax reform
Sigismund Mauricas, chief economist at Luminor Bank, also noted that many things may have surprised the election results.
“The performance of the right-wing parties, both the conservatives and the Freedom Party, and, on the other hand, the poor performance of the left-wing parties, especially the Social Democrats, is particularly good. The chances of right-wing parties forming a government are very high.
After counting the seats won in a multi-member constituency, as well as a single-member constituency where they fight each other, the right now has 57 seats out of the 71 required. Practically only 14 are missing. The result is that there is a really high probability, of course, without jumping the ditch, you cannot say “op” that we have a right-wing government after all, “predicted the economist.
According to him, the change of government is associated with a series of challenges, as well as opportunities.
“The change of government is likely to be significant and the challenge will be to ensure the continuity of some work that Lithuania currently needs. The period is quite intense and the government will be formed, probably only in December.
We will have such an “intergovernmental” period and, of course, the challenge will be to shape the budget for next year. The biggest challenge is that there may be an attempt to make cardinal changes in the short term and that may not necessarily be a good thing. Can form the javu printing of 2008 night tax reforms “, – considered Mauricas.
According to him, the new opportunities are associated with a large amount of EU funds, as well as an economic DNA investment plan.
“I think that if a stable coalition is formed, there is a real chance for Lithuania to make a breakthrough in the next four years, because Lithuania has really suffered little from this crisis, it has a good starting position. If the Government really works for emphasizing the long-term strategic objectives of Lithuania, I think it is really possible to achieve a lot, ”explained the economist.
According to him, in the short term there may be some challenge in rushing to balance public finances. Major changes in this area are said to cause more confusion than good.
“Clearly, the other challenge is that the three parties that are currently joining the coalition, namely the Liberals, the Freedom Party and the Conservatives, have some differences of opinion on certain things.
Conservatives advocate more redistribution through the budget, harshly criticizing the tax reform that has lowered taxes on workers. In this sense, liberals should, at least ideologically, support such things, “said Ž. Mauricas.
According to him, within the new coalition there may be many debates about which direction Lithuania should choose. Especially how much do you want to redistribute, what should be the tax level.
And, of course, the role of the Presidency will not be the last here. The presidency, so to speak, set the tone by saying that the purpose of government is the welfare state and it would be nice if the parties came to the Seimas that they wouldn’t have to explain what that welfare state is.
I don’t know what the parties were referring to, but the liberal parties, well, they don’t usually talk much about the welfare state. Then there may be some “changes”, said the interlocutor.
According to him, Lithuania does not currently have a budget revenue crisis. But we have a spending crisis:
“We have it for objective reasons, because we needed to allocate funds to stimulate the economy, but practically all countries have it. An added element, the icing on the cake, was the fringe benefits, for retirees, children’s money and for other groups.
It’s not really difficult to get back to normal, especially since the economy is doing so well. Next year’s budget would be enough to cancel or no longer run a spending surplus, and it doesn’t make sense and perhaps it doesn’t make sense to cut or rebalance something, since virtually all institutions and other countries are turning a blind eye to budget spending. We would be a white crow if we started tightening our belts next year. “
Doubts about tax cuts
Tadas Povilauskas, an economist at SEB Bank, was cautious about possible changes; It remains to be seen what the new governing coalition will really look like.
“I think there will be no change so soon. It is still necessary to understand that it is difficult to undertake some radical changes so quickly, especially considering that although the economic situation in Lithuania is quite good, it is not ideal.
And when it comes to next year’s budget, which will be considered by the government on Wednesday, I don’t think the newly elected government coalition will make a big difference, “said the economist.
In his opinion, more significant changes are possible from next year.
“I saw that it was said today that people missed liberalism, lower taxes. I think there was only a desire here to see more professional power, to see other people in power.
Still, when the new government, the new Seimas, faces real challenges, I think the direction will not be much different when it comes to the economy. The same taxes on employees, taxes on the population, have been reduced in four years. There will be no going back in that direction, ”said T. Povilauskas.
On the other hand, he said, most parties will not escape the challenges of further redistribution of gross domestic product. It must be increased if we want to secure and improve all basic social functions.
“So we shouldn’t talk about bigger tax cuts and we shouldn’t expect them to go down a lot. If not, what will the budget be for next year and next and what will be the goals set?
I believe that there will be no major changes in the short term and that burning issues will be addressed. So far, the current government has promised a lot. The question is, what else does the new budget promise? I think that in the short term no one will want to lower those expectations ”, explained the economist.
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