The rush of G.Naus prda, who did not wait for conclusions, to grant Income Tax Relief to Seimas has been criticized: it is similar to a race | Deal

The presidency intends to ensure that the new Income Tax Incentives, which provide for the possibility of paying lower taxes to companies that increase wages, come into effect from 2022, although the Ministry of Finance has announced that will implement tax changes no later than 2023.

A two-year period will be devoted to debating what the country’s tax system should look like.

Minister of Finance Gintarė Skaistė, 15 minutes Commenting on the bill submitted to the Seimas by G. Nausėda, he stated that we must first discuss the benefits that increase budget revenue, and then we must discuss additional ones.

“I would see this benefit as one of the three alternatives for income tax. As an alternative is now presented and the other two do not yet have their own bills, the question arises how we can support this initiative without considering everything else. ” 15 minutes said the minister.

He said that the budgetary impact of this and other models is currently being calculated by specialists from the Ministry of Finance, but specific estimates are not yet available. Therefore, the minister added that he does not know how he will vote during the presentation of this law in the Seimas.

Mykolas Majauskas, president of the Seimas Budget and Finance Commission (BFK), also criticized this decision of the president.

„I must admit that I am very saddened by this decision of the honorable president. This is not a constructive step that can bring state institutions closer together. And it certainly won’t help create a fairer fiscal policy. ” 15 minutes said the parliamentarian.

He previously criticized the president’s proposal, arguing that corporate tax breaks are more relevant for large companies operating in mature sectors with limited competition, such as banking.

Expert: Similar to racing, who will offer more

Income tax relief is one of G. Nausėda’s main on February 11. submitted proposals.

The idea raised by the President on the reform of the Corporate Tax Law provides that those companies whose salary fund expenses increase at least 8% per year with respect to the previous period could deduct salary fund expenses three times instead of the current. one when calculating the income tax to be paid. This would reduce the income tax payable for companies that increase wages more quickly or employ more staff.

The qualification criterion is 8%. The growth of the wage fund, in the opinion of G. Nausėda’s team, would allow wages to converge towards the Western standard.

However, the president’s rush to present his proposal to the Seimas without discussing it with the public is surprising.

Ramūnas Vilpišauskas, Professor and Political Scientist, Institute of International Relations and Political Science, Vilnius University 15 minutes He said the president’s presentation of these amendments lacked an assessment of the impact and adequacy of the current tax system and a public discussion of the consequences.

It is like the competition, primitively speaking, who will offer more.

“Such uncoordinated proposals from different institutions do not seem to me to be in the interests of the State. It is like the competition, primitively speaking, who will offer more. If those changes lower taxes, it is attractive to those for whom the tax burden is reduced. But at the same time, there is the question of the impact on budget revenue. The president must also answer this question, especially when he places so much emphasis on the concept of the welfare state, which is based on the redistribution of revenues collected through the financing of public services. ” – 15 minutes said the political scientist.

The professor recalled that we saw similar processes last summer, when the president’s proposals regarding benefits and tax changes were not accepted by the then governors.

“That cooperation between the president and the ruler could be more constructive. Perhaps there are things that are useful for the people of the institutional competition, but in this case it will be more similar to the institutional competition, who will offer more, and if it is rational and appropriate, as if it were in second place, “he said. R. Vilpišauskas.

Marius Dubnikovas, vice president of the Lithuanian Business Confederation and financial analyst, while supporting such a corporate income tax relief, would be in a more rush to make tax changes.

“The proposal itself is very good, but the question is whether it will find a place in the tax system. The current tax review will be long and consistent. The new government is looking for answers on how to look at the whole package constructively. This is just one of the proposals and its benefits will be discussed. ” 15 minutes said the financial expert.

According to M. Dubnikov, the chaotic tax policy applied so far, when the tax decisions came into effect in a couple of months, was not unfavorable either for the companies or for the authorities.

“It just came to our notice then. Slow performance suits us, there is no need to talk about overnight tax reforms. Four years ago we had a chaotic fiscal policy; for example, decisions are made from November and take effect on the first of January. Neither the companies nor the State Tax Inspection could keep up with these changes, “he said.

Cut in one place, add in another

Meanwhile, the economist of the bank SEB Tadas Povilauskas 15 minutes He said the president’s proposals were financially justified, but it was unclear how much the scheme would actually be attractive to businesses and how many businesses would use it.

“The main factor that determines how much an employer pays an employee is their situation and that of the labor market. Therefore, it is unlikely that any employer will increase wages just to earn something through income tax. If you increase your salary more than the labor market, you save in terms of income tax, but at the same time the profits themselves decrease, because they increase costs and therefore decrease the profitability of the shareholders ”, said the economist.

At the same time, however, he noted that while it is difficult to guess how many companies it is difficult to connect with, the scheme itself is not paradoxical: it aims to change redistribution in favor of the employee.

“In theory, everything is understood, the objective is to reduce income inequality and bring wages closer to the level of Western Europe. But going back to practice, it’s hard to say how much will work. Businesses that raise wages will naturally benefit from it. I think companies would appreciate this measure, because there will be nothing worse than that: if you want to increase, if you don’t want to, don’t do it. Therefore, there will probably be no opposition ”, predicted the economist.