Majauskas: we will not introduce new taxes

In the program “Monetary Affairs”, Mykolas Majauskas, chairman of the Budget and Finance Committee (BFK) of the Seimas, member of the Union of the Homeland – Lithuanian Christian Democrats, and Valius Ąžuolas, former president of the BFK, member of the Lithuanian Union Peasants and Greens, commented on the budget for next year. According to M. Majauskas, the situation is much worse than that drawn by the outgoing rulers, because the budget does not include the costs of business support measures. Meanwhile, V. Ąžuolas is convinced that the budget meets all commitments and the new government will be able to borrow more. The program also looks at what tax changes to expect.

Promises stability

The program asked M. Majauskas how we will live with the new government for the next four years. According to the new president of the BCF,

“The tax system should behave like a glass shop, do not make sudden movements. Unfortunately, the previous government acted like a clumsy elephant: where it turned, everything was shattered and even tried to stick with the legs. We have a semi-reform. cohesive tax-free income (NPD), with a doubling of property taxes, a strange car registration tax. We have a lot of corrupt taxes that we will have to live with now. My main position is that we should not make sudden changes important, much less introduce new taxes. It is necessary to establish stability in the tax system, we will strive to achieve it “, said M. Majauskas.

“If someone asks my opinion, we will not introduce any new taxes,” Majauskas said again when asked about the EU’s emphasis on taxes on pollution or digitization.

At the same time, however, no changes should be expected with labor taxes. It was asked if it was possible to reduce labor taxes and not tax reinvested earnings.

“During the electoral campaign, I said that the proposals of the Liberal Movement to reduce taxes on personal income by 1.25 percent. it is faster to get out of the realm of fiction each year, as such offers cost several hundred million euros. The budget cannot afford such losses. I am deeply convinced that there will certainly be no such solutions.

The most important thing in the tax system is stability. Do not change, if you can, there are no taxes – neither increase nor decrease, guarantee stability. It is also important for the entire economy, for investors, to know in which space and environment they will work. And it’s important for people themselves to know what to expect when planning a family budget. Our objective is to ensure the stability of the tax system, the reliability of the financial system, and we will try to do so ”, assured M. Majauskas.

President Gitanas Nausėda has expressed the expectation that income inequality will be reduced and unfair tax benefits will be reviewed. According to the new BFK president, there may be discussions on these issues, but no quick fixes.

“We are ready to discuss them. The presidency has its proposals, the opposition has theirs, the ruling majority also has a wide range of proposals on how and what benefits should be abolished. I think we really have to discuss this, but cut it only after see it eight times. We should not rush with decisions, “said M. Majauskas.

V. Oak also argued that stability was needed at this time.

“In the current situation, when the economy faces so many challenges, any fiscal movement could be disastrous. We must maintain the status quo and treat all taxes responsibly. I’m even a bit surprised by the president’s liberal position that a “cattle farm” should be reviewed. Surprisingly, that position is “ranching.” Foreign experts rate our tax system very well. There are so many opportunities to invest, attract new business, develop new business. It is necessary to maintain what we have, not to make sudden movements with taxes, because we are one of the EU countries, if we create worse conditions for business than in other EU countries, we will only harm ourselves, “said V . Ąžuolas.

Lithuania’s Debt May Increase

Regarding the budget for next year, which the “peasant” government will leave, and the new one will have to be approved, the representative of the governors M. Majauskas says that the real situation is much worse than the outgoing government claims.

“I will vividly remember the saying of the King of France: my age will be enough, and after me even a flood. The outgoing government seems to have followed similar provisions. Next year’s budget does not foresee any measures to help companies affected by the pandemic. . Meanwhile, we know that both the catering and accommodation sectors, and a number of companies where workers are forced to be inactive, do not receive any compensation. This is the first part where it will be necessary to review and increase the spending in the budget, ”said M. Majauskas.

Both the Bank of Lithuania and the State Audit Office claim that public debt will actually be higher than positive. The budget deficit is expected to reach 4,110 million in 2021 and will be equal to 5%. gross domestic product. The State Audit Office predicts about 1 percent. the debt will increase and the Bank of Lithuania will increase by 2%.

According to V. Ąžuolas, former president of the BFK, the budget meets all commitments, including commitments to doctors and teachers.

“As for the Bank of Lithuania’s forecast, we recall how double-digit economic recessions were forecast in the spring and not all of them turned out to be a more intimidating measure. To this day, we see what the government is passing on to the new government: the smallest recession in Europe. Consequently, all the measures have paid off. If we talk about the debt ratio, it is one of the lowest in the EU, it is below the EU average.

Our debt ratio will be around 50% and the EU average will be around 80%. Therefore, we still have some space. Of course, we must take all necessary steps and borrow responsibly, but it goes without saying that we must stop borrowing now that it has approached the threatening threshold. Now the most important thing for our economy is to survive this pandemic period, and after the pandemic period, we will be able to grant this loan from a growing economy, all the more so since the interest rate is zero ”, assured V. Ąžuolas.

“Obviously, a colleague doesn’t get too tangled up in the budget structure, because he has to anticipate expenses in the budget, then adjust sources one way or another, maybe redistribute money, but he has to anticipate expenses. No spending is anticipated in this budget for next year and it cannot be taken from the sky and forecast for the year without adjustment. What this government has tried to do is draw a more beautiful budget than it will actually do. It is obvious that these measures will be necessary, they simply decided not to include them, not because they do not want to help the company, but simply because they want to show the budget better than it really is ”, answered M. Majauskas.

And he also added that laws have been passed allowing the government to borrow up to $ 5.4 billion. valid until December 31 of this year.

“Can the current government guess what measures will be necessary after the new year? It is really difficult which sectors we will quarantine the most, which ones the least. The controversial situation of which other instruments, where European funds will be poured, shows the need to adopt the measures that are most needed during the year. The government has those opportunities. You can borrow and take the measures you need ”, answered and assured V. Ąžuolas.

Regarding the “DNA of the future” plan, V. Ąžuolas indicated what could not stop this project, only to review it in the course.

“The more we slow down, the more likely it is that we will not use those funds,” he said.

M. Majauskas agreed that if 2 or 3 percent. the plan will not be used wisely, it will not be a big problem and the whole plan should not be discontinued. However, it is important that 20-30 percent does not occur. the plan will be used inefficiently and will be invested in concrete rather than economic transformation. According to M. Majauskas, the DNA plan must be revised without stopping it. He also indicated that this Wednesday the largest projects, interested institutions and associations will be reviewed. The objective will also be to involve the public in the debate.