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In its conclusion, the Cabinet of Ministers stated that the President’s proposal on the PIT is not in line with the Government’s program aimed at reducing the tax burden on those with the lowest incomes.
“The reduction of the tariff for the entire population would not comply with the Government’s program or the recommendations of international institutions regarding the reduction of poverty and income inequality through fiscal measures,” said the Minister of Finance, Vilius Šapoka, at the meeting.
According to him, the proposal to reduce the GPM rate by 5% for half a year until January of next year. the points would cost the state about 400 million. However, there is a risk that politicians are unwilling to return the rate to its current level.
According to the Minister, in such a case, the reduction of the GPM rate would cost the state more than 700 million. euros
Photo by Julius Kalinskas / 15min / Vilius Šapoka
“Such a loss would have to be offset by a sharp increase in public debt, which would increase both the debt and the costs of managing it,” said V. Šapoka.
According to the Government, a reduction in the GPM rate for the entire population would benefit the majority of employees, who are less sensitive to the negative financial impact of the new coronavirus pandemic.
According to her, accepting the proposal to reduce the personal income tax rate would create a significant gap between the benefits received by low and high-income workers.
According to the government, the benefits of reducing the PIT from July for a person who earns the “minimum” in July would reach 77 euros, and for a person who earns 4,000. 1,117 euros, which is almost 14.5 times more than for a winning MMA.
Luke April / 15min photo / Money
“This would only increase income inequality in Lithuania, and international institutions regularly emphasize the need to improve Lithuania’s tax and social benefits system to address this problem,” the government resolution said.
However, the ministers supported G. Nausėda’s proposal to increase the amount of non-taxable income by 50 euros from July. According to the Government, the benefits of increasing the NPD would be perceived by those who most need the support of the state, and the benefits would decrease as the population’s income increases.
For those who earn the “minimum”, after-tax income would increase by about 120 euros per year, and for those who earn 4,000. It would have no effect.
Photo by Julius Kalinskas / 15min / Work in the office
“Therefore, increasing the NPD would make a more specific contribution to reducing poverty and income inequality, as well as unemployment, and would be more socially fair, especially in light of the new coronavirus pandemic (COVID-19)” said the conclusion.
After the government presents a conclusion on the president’s proposals, its consideration will return to the Seimas. The negative conclusion does not compel MPs to vote against the bills, but governors have previously defended an initiative on GPM because it is socially unfair, but promised to support a proposal to increase the NPD.
The President has also proposed that a lump sum of € 200 be paid to children from low-income and wealthy families, as well as children with disabilities, and a lump sum of € 120 to all other children by July. The rulers support this proposal, it must be adopted by Seimas on Thursday.
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