The Lithuanian parliament's Committee on Social Affairs and Labor on Wednesday approved of a ceiling on employees' contributions to the state social insurance fund Sodra, back-pedaling on a decision to oppose the measure it took last week.
© DELFI / Domantas Pipas

Thus, a compromise has been found between the government's proposal to introduce a social security tax ceiling and calls for raising the personal income tax rate on income above that ceiling.

The committee's vote came after the parliament's Committee on Budget and Finance earlier in the day backed a proposal from some lawmakers to introduce two personal income tax rates, of 20 percent and 27 percent, without setting a ceiling on Sodra contributions.

"The committees complemented each other and there is no chaos", Tomas Tomilinas, a member of the Committee on Social Affairs and Labor, told BNS.

Finance Minister Vilius Šapoka said earlier in the day that the Committee on Budget and Finance had made a mistake that would have to be corrected by the full Seimas.

The minister said that if the parliament approved of the budget committee’s decision, that would "cause chaos".

A 27 percent tax rate would apply to annual income over 120 average salaries in 2019, 84 salaries in 2020 and 60 salaries in 2021.

The government expects the Seimas to make decisions on the proposed tax reform by the end of the current spring session so that the changes can come into force in early 2019.

It is prohibited to copy and republish the text of this publication without a written permission from UAB „BNS“.

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