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Lithuania's three-year tax system reform on Tuesday passed the second reading in the Seimas.
© DELFI / Domantas Pipas

The reform provides for consolidating labor-related taxes on their employee side, introducing two personal income tax rates, of 20 percent and 27 percent, and increasing the tax-free income threshold and broadening its application.

Sixty-eight lawmakers voted in favor of the respective amendments to the Law on Personal Income Tax, 19 were against and 23 abstained. A final vote on the amendments is planned for Thursday.

Stasys Jakeliūnas, head of the Seimas Committee on Budget and Finance, also presented a separate opinion by several lawmakers, including himself, that the raising and broadening of the tax-free income threshold in the second and third year of the reform threatens the country's financial stability.

"We don't yet have clear projections of how our economy and budget will look in 2020 and 2021. In the fall, perhaps we'll be able to make decisions (on the tax-free threshold) based on these indicators," Jakeliūnas said.

"I'm not opposed to lowering the tax burden, but on one hand, we must do so responsibly, and, on the other hand, we must have sources to compensate (for the tax revenue loss). These (sources) are insufficient and will be discussed, too."

Algirdas Sysas of the opposition Social Democratic group in the Seimas said that the government failed to deliver on its promises to reduce social exclusion.

BNS
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