Lays the groundwork for a pollution tax: some may become more expensive and some benefits disappear

Swedbank chief economist Nerijus Mačiulis says this will drive up prices for some goods and services.

“However, this is a very minor side effect that should be completely ignored,” he says. “In the long term, residents and their children will breathe cleaner air, there will be less negative impact on the environment and climate change will stop.”

Ecology-related taxes are also supported by Acting Finance Minister Vilius Šapoka.

“I hope the new minister will also support it, because it is a much healthier tax for the economy than, for example, a higher tax on employment-related income,” he said at a press conference this week.

Adopted a resolution

At the meeting held on 18 November, the outgoing Government of Saulius Skvernelis adopted a resolution on the Compendium of the most relevant issues of the European Union for Lithuania in 2021.

The document states that measures aimed at reducing emissions by at least 55% by 2030 are very important for Lithuania.

“They will cover a wide range of policy areas: in particular renewable energy, energy performance of buildings, land use, energy taxes, effort sharing and emissions trading,” the document says.

The cross-border carbon tax mechanism is claimed to help reduce the risk of carbon leakage and ensure a level playing field by encouraging EU partners to increase their climate ambitions.

“We support the Carbon Frontiers Adjustment Mechanism initiative, we are interested in leveling the playing field for our producers and we look forward to a thorough evaluation and discussion by the European Commission.

At the same time, it is important that the proposal for a carbon border mechanism is in line with the requirements of the World Trade Organization, does not create an undesirable burden for EU companies, and covers a wide range of EU industries. “said the resolution.

Will reject subsidies

The adopted document also states that Lithuania is one of the countries that intends to abandon fossil fuel subsidies. As you know, there are a total of thirteen energy subsidies in Lithuania.

1. Reduce the rate of special tax on heating oil; 2. A lower rate of excise duty on coal, coke and lignite used for commercial purposes; 3. Lower rate of excise duty on natural gas used as heating fuel for commercial purposes; 4. Lower rate of excise duty on labeled diesel used in agricultural activities; 5. Exemption from the special tax on petroleum gas and gaseous hydrocarbons for domestic use; 6. Lower excise tax rate for electricity used for commercial purposes; 7. Exemption from the special tax on natural gas used for the combined generation of heat and power; 8. Exemption from the special tax on electricity supplied to domestic customers and beneficiaries; 9. Exemption from the special tax on natural gas supplied to domestic customers and beneficiaries; 10. Exemption from the special tax on electricity produced from renewable energy sources; 11. Exemption from the special tax on natural gas used as motor fuel; 12. Incentives for biofuels; 13. Preferential 9 percent. the rate of value added tax applicable to thermal energy supplied for heating homes, hot water supplied to homes, or hot water for hot water.

Lithuania’s National Energy and Climate Action Plan also states that they should be abandoned.

Will make demands

Among other things, the resolution states that Lithuania positively assesses the revision of CO2 standards in cars, which increases the CO2 reduction requirements for car manufacturers.

N. Mačiulis told Delfi that he was positive when any CO2 contamination was taxed.

“Not only in the electricity generation process, not only in industry, but also in the services sector, when companies will be forced to think about how many buildings they have, equipment they use and their activities pollute the environment in general.

In principle, this is the only quick and efficient way, together with subsidies and direct payments, to encourage the abandonment of the most polluting activities. I would not look at how a tax that will reduce the purchasing power of consumers will raise the prices of goods and services, because the tax collected returns to EU citizens, “he said.

The economist generally said that these changes will have a positive impact on the population.

“Both local and global processes that have a negative impact on flora, fauna and human beings will be stopped.

It is difficult not to underline the importance of such initiatives and it is certainly very gratifying that, in the context of a pandemic, with an increase in the EU budget and an increase in non-reimbursable aid to all Member States, a proportion very large (30%) should go directly to greening the economy. energy both in industry and in the service sector, thus reducing CO2 emissions, ”said N. Mačiulis.

Will check the digit

The EU Compendium also addresses the digital tax initiative as a Community own resource.

“Lithuania supports the development of global principles for the taxation of digital companies, which would address the challenges posed by the digitization of the economy in the field of taxation.

However, given that there is still a global debate on the revision of the principles for taxation of the profits of digital companies, and that corporate taxation is an important source of income for national budgets, consider the digital tax as a new own resource would be questionable.

In the absence of a multilateral agreement on digital taxes, we would be ready to seek solutions at the EU level, “the resolution said.

There, the problems of employees of various platforms are also highlighted. The objective is to improve and guarantee decent, transparent and predictable working conditions and social protection for those who provide services to people through platforms.

We support the aspirations of the EC, as it is necessary to adapt to new forms of work and provide at least a minimum of social protection to those who provide services through platforms.

In Lithuania, platform employees are self-employed, so we believe that at the EU level this distinction should be maintained without creating additional subgroups between the self-employed and salaried employees who work on employment contracts, ”says the Government.

N. Mačiulis said that in this area we should talk about fair taxation of digital services.

“In terms of both food supply and transportation for atypical labor contracts, thus paying lower taxes.

I would view this as equalizing the conditions of competition and imposing taxes on the goods and services where they are provided, thus contributing to the budgets in whose countries those goods and services are produced and provided to consumers.

We have a lot of distortions in this area right now. There are countries that abuse this, creating exceptional favorable conditions, which means that consumers in other countries suffer. Here, the synchronization of the tax base is very important ”, said the interlocutor.