“For now, we hear that only business will pay for it. And the business has said from the beginning that we are ready to pay. But there is another side, if those taxes become such that some businesses start thinking about other jurisdictions, then we will lose twice here,” A. Romanovskis told “Žiniai Radio” on Monday.
He also pointed out that the “4 percent” initiative, which encourages allocating 4 percent to defense from the gross domestic product (GDP) is supported not only by business, but also by about 50 thousand citizens.
Also, according to the president of LVK, the increase of value added tax (VAT) and personal income tax (PIT) as a possible source of funding was not sufficiently discussed.
“There is such a feeling of excitement. I would objectively say that the discussion on GPM and VAT ended before it started,” he asserted.
Also, according to A. Romanovski, the fear of borrowing is also strange, especially when the debt that grew during the pandemic is currently shrinking. He emphasized that the debt level is about 38%. from GDP, considered so low precisely for such cases that it would be possible to borrow for “vitally” important purposes.
“We borrowed, earned a lot of money, paid off debts and no tragedy happened,” said A. Romanovskis
“Our low level of debt is necessary so that when there is something vital, you use it, but not simply ‘eat.’ Defense funding is not that,” he argued.
ELTA reminds that in mid-April, Prime Minister Ingrida Šimonytė organized a meeting of political parties and business representatives regarding the increase of Lithuanian defense funding. After that, the Prime Minister announced that it is proposed to establish a special fund that will accumulate funds for the needs related to additional defense financing.
Also, according to I. Šimonytė, politicians, business representatives and non-governmental organizations tend to agree on additional defense financing after raising the profit tax and VAT by 1 percent each. point.
At the time, President Gitanas Nausėda was against any increase in VAT and believed that defense should be financed by other means.
In order to unite society and encourage politicians to agree on 4% as soon as possible. In defense of the GDP allocation, civic-minded Lithuanian businesses and organizations joined the “4 percent” initiative a few weeks ago.
National defense funding in Lithuania will amount to 2.75 percent this year. from GDP, but it is aimed that this amount will reach at least 3% in the coming years.
He does not think that the state bank would be an efficient market player
When the Social Democrats hinted at the possibility of creating a state bank last week, A. Romanovskis says that it would probably not be effective. According to him, many members of the public do not understand that such a financial institution should still operate under market conditions.
“I never believed that our state-owned business, when it operates in a competitive environment, could be efficient. Because one thing that many people don’t understand is that the state bank will have to operate under exactly the same conditions as the private banks. Because we are part of the euro system, this is licensing, capital matters and the like,” A. Romanovskis explained to “Zinių radio” on Monday.
According to him, if a state bank existed and offered lower service prices, it would require constant support from the state, which would raise questions about patronage. And such support, according to the head of LVK, would come from the budget, which is collected through taxes.
“There will be constant support from the state and there may be many questions related to nepotism, patronage and many challenges.” And then the question is whether we will pay as taxpayers on the other side,” he asserted
“As an organization, we have always been against business and state competition,” he emphasized.
On Saturday, in the council of the Lithuanian Social Democratic Party (LSDP), faction leader Rasa Budbergytė said that a state bank must be created in Lithuania. According to her, such a decision would improve the competitive environment, since 18 banks operating in the country do not compete.
She noted that banks are raising rates and reducing the availability of services, and the development of a state-owned bank would allow businesses to gain better access.
ELTA reminds that there are currently 18 participants operating in the Lithuanian banking sector: 13 have bank licenses, and another 5 operate as branches of foreign banks. The majority of the market is held by Swedbank, SEB and Luminor.
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