The tax changes put forward by business organisations are the least damaging to economic growth and have the broadest base, the head of the Lithuanian Confederation of Industrialists (LPK), Vidmantas Janulevičius, suggests.
He also said he opposes the Government’s plans to raise corporate and personal income tax rates.
"We hear that the Government is inclined to increase corporate and personal income tax rates, which have the biggest impact on economic growth. In these already hard times, the proposed changes could significantly weaken the country’s competitiveness. In the long term, such a policy would lead to a shrinking gross domestic product, which in turn would lead to a cutback in defence spending," Janulevičius commented.
Raising the personal income tax rate for top earners would increase the risk of emigration and have consequences for economic growth, says Board Chairman of Investors’ Forum Rolandas Valiūnas.
"This would result in lower investment, slower labour productivity growth and slower wage growth. Not to mention the extremely poor signal we are sending to the international investment community in times of economic and geopolitical uncertainty by talking about raising taxes rather than boosting the competitiveness of the economy," Valiūnas explained.
President of the Lithuanian Business Confederation (LVK) Andrius Romanovskis said a corporate tax hike would affect the investment climate similarly.
"The tax has already been raised by a percentage point last year, so the proposed further drastic increase will have a negative impact on the investment climate. In addition, the biggest negative impact of a corporate tax increase will be felt by the lowest-paid workers in lower value-added sectors," he emphasised.
The leaders of the largest business associations are also critical of the suggestion to tax insurance premiums, saying that more than half of the consumers of insurance services in Lithuania are enterprises.
Speaking of the proposed sugar tax, they argue that its fiscal impact would be too small to offset the administrative costs and complex nature of implementation.
Business association leaders are also calling on the Government to commit to reducing public spending in all areas by five percentage points and to make use of defence borrowing mechanisms.
The letter was signed by Investors’ Forum, Unicorns Lithuania, the Lithuanian Employers’ Confederation, Lithuanian Confederation of Industrialists (LPK), the Association of Lithuanian Chambers of Commerce, Industry and Crafts and the Lithuanian Business Confederation (LVK).