As Russia continues its aggression in Ukraine, Lithuanian politicians have recently been discussing how to increase national defense funding to at least 3 percent. gross domestic product.
Several rounds of negotiations took place in the government, but Prime Minister Ingrida Šimonytė’s Cabinet of Ministers has not yet submitted concrete proposals.
A. Armonaitė says that the current situation is harmful – there is constant talk about a possible attack by Russia, but there are no answers on how to strengthen defense financing, which makes the country unattractive to investors.
“We suggest to stop escalating the threat narrative and start developing the security narrative. The painted apocalyptic scenarios for the future of Lithuania create insecurity for investors, our people, and partners abroad. It’s time to say enough is enough – it’s time to make decisions about ambitious defense funding and speak out about it,” – 15 minutes said the chairman of the party in charge of the Ministry of Economy.
“I’m tired of hearing that Lithuania has a few hours left, we see signs that capital may move to leave Lithuania. We need to send a message that we are strengthening our defenses and that makes our country safer,” she added.
Three proposals of the Freedom Party
According to the calculations of the Freedom Party, its proposals will increase the defense budget by 420 million euros.
According to A. Armonaitė, the Freedom Party supports the redistribution of personal income taxes from municipalities in accordance with the proposal of the Ministry of Finance. This would bring about 150 million. euros.
In her assessment, this cannot be treated “as a withdrawal of money from municipalities”, because the growth would remain due to the development of the economy and the funding methodology.
The Freedom Party also proposes to raise excise taxes on fuel – fuel oil, coal, diesel, gas oil in agriculture, as well as alcohol and tobacco. It would also add Rs 150 crore to the exchequer. euros.
The position of the Freedom Party on excise taxes
- The equalization of excise duties on gas oils intended for use in agriculture and fisheries, agricultural machinery and fishing boat engines with other gas oils would add 97 million to the state budget. EUR.
- If the benefit were to be canceled by 30% volume, the excise duty would increase from EUR 60 per 1000 liters to EUR 165 per 1000 liters, which would add 29 million to the budget. EUR.
- If the benefit were canceled by 50% volume, the excise tax would increase from EUR 60 per 1000 liters to EUR 225 per 1000 liters, which would add EUR 48.3 million to the budget. EUR.
- Raising excise duties on gasoline and diesel by 2 cents per liter would add 40 million to the budget. EUR.
A. Armonaitė also supports the increase of the profit tax by one percentage point – it would bring 120 million. euros. According to her, such a tariff change would also allow Lithuania to preserve its competitiveness in the region.
The Freedom Party is also calling for any tax revenue to be directed only to a special defense fund, in addition to earmarked defense revenue that has been used to reduce the debt in recent years.
The Freedom Party rejects other considered proposals – raising the value-added tax by one point, introducing a universal real estate tax and additionally taxing individual activities.
Currently, Lithuanian defense financing accounts for about 2.7 percent. gross domestic product. This is more than the NATO average, but less than Poland and Estonia.
Some business organizations have recently begun to pressure the government to more ambitiously strengthen the country’s military readiness and raise the indicator to at least 4 percent. GDP.
A week ago, I. Šimonytė promised that her government would submit specific proposals “within a few weeks”. Until now, the Prime Minister and the Minister of Finance have not expressed a specific position on the tax changes, they have only presented different scenarios. I. Šimonytė argued that she wants to find the widest possible consensus before submitting the project to the Seimas.
“We only see thoughts, not specific proposals. We offer specific solutions. I hope that we will lead both the ruling coalition and constructive opposition parties out of the impasse,” said A. Armonaitė.
Additional defense funds are needed so that Lithuania can properly host the German brigade and strengthen national defense capabilities.
Tags: Freedom Party announced proposals defense taxes current situation sunk Business
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