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Last week, G. Nausėda hinted at a reduction in the payroll tax.
“One of the possible directions is a temporary reduction of personal income tax during the crisis.” We have a great opportunity to change the negative narrative that came from the previous crisis and inspire more faith in the future, “he said.
Although the president has not mentioned a specific number, there is informal talk of reducing the tariff by 20 percent. up to 15 percent.
On Monday, G. Nausėda discussed his proposal with the leaders of the Seimas factions.
“Promoting positive public and business expectations is crucial to addressing today’s economic challenges. The temporary reduction in GPM would not only allow employees to feel the benefits, but would also increase the competitiveness of Lithuanian companies. The positive effect of the reduction in GPM it would feel immediately after the adoption of the relevant amendments to the laws, “the president said according to the President’s report.
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In Lithuania, an employee pays 20% of the salary received on paper. (or 32% when it exceeds 84 average wages) personal income tax.
You may also be subject to the Non-Taxable Income Rate (NPD), which is calculated this year according to the following formula: 350 – 0.17 x (salary – MMA). The minimum monthly salary in 2020 is 607 euros “on paper”.
V. Šapoka told Delfi that the proposal to reduce the GPM from 20 to 15 percent. Evaluate very carefully.
“Lowering the PIT rate for everyone would not benefit those who earn less, but those who earn more (for example, the benefits of reducing the PIT rate for those who earn MMA – € 12.5 per month, for those who earn € 3,000 – € 150 per month), “he said.
The minister added that it is also important to assess the fact that this is an expensive measure: the budget would lose 339 million euros due to the reduction of the GPM tariff for six months. 678 million euros per year.
“That is why a more socially oriented and long-term measure should be sought to increase the incomes of people for whom it is most relevant, that is, low and middle-income people.
Such an alternative could be, for example, an increase in NPD, which would bring the greatest benefits for those who earn less. The government, after evaluating the alternatives, will present its vision and its specific legal acts, ”said V. Šapoka.
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