The currently existing value-added tax (VAT) of 21 percent can stand to be reduced, believes Prime Minister Algirdas Butkevičius.
Algirdas Butkevičius
© DELFI / Tomas Vinickas

“This is my position – to reduce the general VAT tax. For now, that's my opinion,” the prime minister said in the Seimas on Thursday.

Seimas members Valerijus Simulikas and Eduardas Šablinskas suggested reducing the VAT tax from 21 to 19 percent in February. According to them, this would reduce the prices of food products and other vital neccessities, which would in turn increase consumption.

However, Andrius Kubilius, the leader of the Seimas opposition group, said that the Prime Minister's comments were related to support for the candidacy of Minister of Finance Rimantas Šadžius for the European Court of Auditors.

“Now, before the elections, I don't really believe in what the Prime Minister is saying. His words were part of market-like negotiations between the Social Democrats and the Labour Party for the Labour Party's support of Rimantas Šadžius' candidacy for the European Court of Auditors. The Labour Party has demanded that he support one of their projects in return, for VAT exemptions or the increase of tax-free income,” said Kubilius.

At the beginning of the financial crisis, the VAT was increased by three percent to the current 21 percent. At the time, it was claimed that the VAT increase would be temporary, and that it was a necessary measure for the government to survive the crisis.

According to the Lithuanian Free Market Institute (LFMI), the reduction of the VAT by one percent would cost about €133 million. Therefore, they count shows that a 3-percent reduction would cost about €400 millions.

Žilvinas Šilėnas, the president of the LFMI, said that the VAT should be reduced to its pre-crisis levels. “That money would stay in the people's pockets. That's much better than money in the budget. Let's not forget that people will still spend that money,” he said.

Leave a comment
or for anonymous commenting click here
By posting, you agree to terms
Read comments Read comments

Proposals to charge employers with specifying wages in job adverts received negatively

The amendments to the Labour Code proposed by the “Farmers”, where employers would have to...

Proposals on air quality: maximum odour concentration in air to be reduced

In order to improve air quality and reduce discomfort for those residing near industry, manufacturing...

Capella Baltica increasing investment in Klaipėda FEZ

Capella Baltica, a Spanish cosmetics and food industry supplier, has increased the amount of its...

How blockchain technology will change the world trade?

The field of research of World Trade Organisation chief analyst Emmanuelle Ganne is the application of...

Welcome to Vilnius workshops to support foreign talent relocating to Lithuania’s capital

This Tuesday Vilnius’ business development and tourism agency Go Vilnius at the Workland Business...