They calculated how much time we work to pay taxes and how much time we work for ourselves: the numbers will not make you happy

According to E. Leontjeva, Lithuania is a unique country that included this day in the list of officially commemorated days. This day gives meaning to the fact that throughout the year we give a part of our income to the state. D. Dundulis tried to calculate how much we work for the budget and how much for ourselves. According to him, if we put the numbers roughly, we work for the budget for about 8 months and for ourselves for 4 months. “The largest tax is VAT, followed by income, profit, real estate, and other various fees, the amounts of which are not large, but when you add everything together, a certain amount comes out,” said the interviewer.

E. Leontyeva gave a simple example of how taxes “eat up” part of our money. “For example, a person earns 2 thousand while working, receives 1300 in his hands. After receiving them, he goes shopping, pays VAT, excise taxes, road taxes, etc. In total, that burden is about half of his money, but not everyone pays the same, because officially in Lithuania, the shadow economy covers about 20 percent, if not less. Hence, someone pays very little tax and someone pays for it. But if we go back to the theme of the show – Taxpayer Appreciation Day – its purpose is to help everyone realize that we all carry that burden and that the ability to pay taxes depends on the capacity of businesses. In order for a person to work, a workplace must first be created for him. “Unfortunately, the confrontation between people and the attempt of politicians to set a person against the business, against the employer, is very painful”, said the guest of the show.

She was seconded by D. Dundulis. “I am hurt by those speeches from high-ranking state officials. Because if there were no taxpayers, the state would have no income. Unfortunately, the disrespect for taxpayers is very felt. If it had appeared in the 2000s, it has disappeared today. In the 2000s, such ideas were spread that business must do everything in order to succeed, because if business succeeds, so will the state. Now such a position no longer exists, they are simply trying to oppress us”, said the interviewer.

When asked to remember more specifically what happened in the 2000s, E. Leontyeva said that at that time there was a zero rate for reinvested profits. “The government’s program included a provision to switch to profit taxation only at the time of dividend payment, which would be a strong change, because companies, with such high interest rates today, must be accredited by the state because they pay advance profit tax. If it is taxed only at the time of dividend payment, this problem disappears, the cash flow corresponds to the fact of taxation. If the company pays dividends, it always has funds to pay the corporate tax. Now that system is messed up”, said E. Leontyeva.

At our neighbors in Estonia, only dividends are taxed. Unfortunately, such a model was valid in Lithuania only in 2000, and then the situation changed. “I often get comments that it is not the business that pays the taxes, but the employees or the customers. In fact, buyers also pay taxes, but one thing the public does not understand is that if business taxes are raised, the cost price of goods also rises. Another thing is that if the business does not create a product, there will be no taxes. Yes, the consumer pays, but that requires a product, and it’s created by an entrepreneur. There is no need to belittle businessmen that they do not contribute anything to the payment of taxes. I often feel like saying, go do it if you think it’s that easy. We don’t want speeches, but more work,” said D. Dundulis.

According to E. Leontjeva, the time of the covid pandemic was a great experiment that showed how much effort businesses had to make. “All the blame has been put on the businessmen for the prices, but the first thing to understand is that the amount of money has been increased. In Lithuania, it increased by 70 percent. This was the goal of the Central Bank – to stimulate demand. People had money, prices had to follow that demand, that’s why there was a shortage of goods and raw materials, because the producers didn’t have time to produce everything,” said the interviewee. According to her, so much money was thrown into the market because of the fear that the economy would stop, but it was overdone. This amount of money and the stimulation of demand is what caused prices to rise. “When the price of real estate started to rise, it fully corresponded to the indicators of the amount of money in the market. It can be said that real estate is the paper that absorbs excess money,” said E. Leontyeva.

When asked how it is in other countries, the interviewee said that the situation is different. “In most countries, that tax-free day is at the end of May-June. It is the end of July in France. But the most important thing is that that day does not accurately reflect the situation, because there are very large state debts, which increase the tax burden for future generations”, said the interviewer.

What should we do to change the tax situation in Lithuania? “First of all, we should aim to use taxpayers’ funds efficiently. Business had to save during covid to survive, authorities did not. Questions must be asked: what does each institution create, who does it serve, what does it receive or lose funding for. Funding is given today because it was given yesterday. If we don’t link change with financial responsibility, change doesn’t happen. Some changes have occurred, but they have not plumbed the underwater depths from which a customer-centric civil service could emerge. The kind that cares about people’s opinions and who, seeing that one and another company is climbing on the same rake, would start to solve the problem. No one does that now, the salary is not tied to whether you offer those improvements or not. If everyone stumbles at the same stone, it will continue to stumble. I think we need politicians who have the experience not only to think, but also to find the origins and regularities of those problems, because only then can they offer a solution,” said the interviewer.

D. Dundulis also supported it. “On the scale of Lithuania, it is not difficult to calculate how many taxes the state collects, but maybe there is not much desire to do that. Another problem is that now there is a lot of talk about defense, where to get money from. I agree that taxes will have to be increased at some point, but it is forgotten that a lot of money is wasted in the government sector. For example, when farmers revolt, an institution is formed to monitor milk prices. An institution is created, then the conflict arises again, the old one is left, a new one is created again. There are already several such institutions that regulate milk prices. They all sit quietly, receive salaries and are happy,” said the guest of the show. According to E. Leontjeva, we have such a paradox that everyone is supervised, but the government itself is unregulated, unable to establish rules for itself.

“I have heard the idea that in a democratic world, governments change every 4-5 years and they cannot implement large projects because the time period is too short. But for the last almost 10 years, the Lithuanian state budget has been growing all the time. In the last ten years, the government never had a great need to save, the institutions only received more, all that was needed was imagination, how to spend that money. Even during the 2008 crisis, everything worked perfectly. What is happening now? Currently, there is a lack of money for defense. But the government does not even think that that money can be taken from internal reserves. They are looking from outside”, said D. Dundulis.

As for the government, E. Leontyeva said that the further one goes, the more noticeable is the shift towards increasing populism. “Those who promised more sweetly are elected, but the ability to commit and execute their program still needs to be improved.” Today, commitment to citizens is not considered mandatory. Politicians have a keen interest in the lives of their constituents while they are not elected, but it is important that that connection does not stop once they are elected. We can be proud of the fact that we are the richest country in the whole post-Soviet bloc, which means that we are able to contribute to public welfare, to those general expenses through taxes, now we need to ensure that those funds are used correctly. So that communication and respect for each other grows”, the interviewer concluded the conversation.

D. Dundulis also agreed with her. “It is necessary to understand that if there are no taxpayers, there will be nothing. We want that respect, because at the moment it is not only lacking, but not at all,” said the guest of the show.