The Seimas, the Parliament of Lithuania, has rejected the initiative to introduce progressive taxation.
© DELFI / Mindaugas Ažušilis

On Tuesday, the Seimas considered amendments to the Law on Personal Income Tax that would have established progressive taxation rates. The Seimas Committee on Budget and Finance proposed that the bill be dropped. Fifty-six MPs voted to embrace the Committee's proposal, six voted against and six abstained.

When proposing to dismiss the initiative, the Committee on Budget and Finance quoted the conclusion of the Government and the Legal Department of the Office of the Seimas.

On 20 October, MPs approved the proposal of social democratic MP Algirdas Sysas regarding amendments to the Law on Personal Income Tax that would have introduced progressive taxation, but asked for the Government's opinion.

Based on MP Sysas' proposal, yearly income below EUR 14,000 would be taxed at 15 percent. Income between EUR 14,000 and EUR 36,000 would be taxed at 25 percent. Incomes above EUR 36,000 per annum would be subject to a 40-percent tax rate.

At the moment, personal income tax is a flat rate of 15 percent, although certain deductions apply.

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