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Photo by Judita Grigelyts (V)
On Tuesday, the Seimas approved only part of the initiative proposed by President Gitan Nausda to temporarily reduce the taxation of labor during the crisis: it is planned to increase the amount of non-taxable income to 400 euros by the end of this year, but did not accept points reduced the personal income tax rate.
In the Seimas Hall, 111 deputies voted for such amendments to the Personal Income Tax Law, 1 abstained, nobody voted in favor.
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The President based his proposals on the need to give more weight to countercyclical fiscal policy during the crisis period. in the second half of the year, using the current horizontal tax instrument to reduce temporary labor taxes. According to the initiators of the amendment, such a countercyclical fiscal stimulus would help the Lithuanian economy to maintain a better position during the crisis if aggregate demand decreased.
With the approval of Seimas, the amount of 400 euros or 50 euros more than the tax free income (NPD) will apply from 2020. on January 1, declaring income for the tax period. Previously, the NPD was planned to be increased by this measure to apply from 2021. According to the President’s team, a higher NPD will further increase the revenues of the lowest-paid companies. At the same time, it is planned to adjust the technical factor of the NPD formula to 0.17 0.19 to keep the sample covered by the NPD substantially unchanged.
An increase of 50 NPD EUR will require 84 million euros in the budget. EUR.
According to the approved procedure, the monthly NPD applicable to a person whose income related to employment does not exceed the monthly minimum wage (MMA) in force on January 1 of the current calendar year will be 400 EUR. For those residents whose monthly employment-related income per month exceeds the current MMA, the applicable monthly NPD is calculated according to the applicable formula.
The country’s president has also been serving temporarily, since July 1. by the end of December, the personal income tax (PIT) should be reduced from 20% to 15%, applying it to the employee’s income up to three average earnings (VMU) or up to 4,000 euros before taxes. However, the Seimas did not approve this initiative (???). The reduction in the GPM budget is not expected to lead to around € 400 million. Income in euros, and next year, if this rate is maintained, more than 700 million. EUR.
The Seimas Budget and Finance Committee rejected the president’s proposal to temporarily reduce the PIT a week later. The Committee approved the initiative of the Head of State to halve the increase in the amount of non-taxable income (NPD) to 400 euros.
Our position is that we need to help low-income companies, and increasing the GPM will help high-income people more. Also, the cost of temporarily changing the GPM is too high. We cannot allow it, at the Seimas committee meeting spoke the representative of the ruling peasants Valius uolas, the committee chairman.
Rayti commented
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