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As prices rise, more taxes are paid: there is no agreement on where to put the collected money

With prices rising at record speeds, residents are paying more taxes today. Last year alone, these companies and themselves contributed almost a billion and a half billion in surplus income to the budget. As long as corporations demand that taxes be used for a single purpose, economists say the money should be used to pay down public debt. “If we have a high public debt, it will be difficult for us to borrow when we need it”, explains an expert.

“VAT alone is naturally increasing due to rising commodity prices,” Algirdas Bartkus, associate professor at Vilnius University, told LNK News.

He explained that even though extra revenue for the budget sounds cheerful, people are paying more taxes due to inflation, but they can buy less to pay.

“Yes, prices have a ‘positive’ effect on this number,” he added.

Seimas member Rasa Budbergytė assured that it is difficult to find out who uses the additional costs collected last year.

“If you now search on the website of the Ministry of Finance how the budget is implemented and where the revenues are directed, then in fact this information is not very clear in Lithuanian,” she said.

Finance Minister Gintarė Skaistė said the additional revenue makes it easier to fund basic state needs, such as defence.

” have already been spent when spending on national defense was approved – 300 million. Eur, therefore, the surplus, as the opposition likes to call it, or, more precisely, the income surpluses, are all distributed and there is still a need to borrow a little,” the minister said.

The constitution provides that the government cannot use excess revenue at its discretion.

“If the government decides to spend more extra money, it has to go back to the Seimas according to the Constitution and approve a new budget. That’s what’s happening right now.

The government has decided that there is a need for additional spending, so it comes back to the Seimas, adjusting the spending,” commented Mykolas Majauskas, Chairman of the Budget and Finance Committee.

However, questions arise as to whether this is still being observed, as in March even some of the leaders questioned why the Seimas had abolished the VAT exemption for heating, as it was then said that the losses budget would be offset by excess revenue, although the budget was not changed.

“If you are not an experienced financial specialist, it is difficult to understand this mathematics. But that is not really clear…”, said R. Budbergytė.

The leaders plan to raise around 800 million. Surplus income in euros.

“Now we see that the revenue from the state budget will be 800 million. The euro is higher,” Majauskas calculated.

Mykolas Majauskas

Mykolas Majauskas
© DELFI / Julius Kalinskas

Although the exact numbers are still unclear, those managing the money plan to use it to mitigate the effects of inflation.

“He is considering an increase in pensions, from the NDP, as well as an increase in social benefits and some social benefits for the admission of Ukrainians,” Majauskas said.

Surplus revenues allow Lithuania to borrow less.

“In general, Lithuania’s debt looks quite constructive in the general EU context and is not excessive,” said G. Skaistė.

Companies are wondering if it is really better to reduce the public debt with such additional revenue when the government itself does not see the debt as a big problem.

“In practice, at least four countries are coming out of our economic life so far: Russia, Belarus, China and Ukraine, so we think we need to think about how to seek new markets for export now, because our economy is based on exports,” he said. The head of the Lithuanian Confederation of Employers, Danas Arlauskas.

Danas Arlauskas

Danas Arlauskas
© DELFI / Andrius Ufartas

The company proposes to remove taxes on profits that companies would invest in development in Lithuania. It is said that initially the budget may lose taxes from the company, but it is proposed to use excess revenue for this purpose.

“Estonians, Latvians and Poles have long understood that this has to be done, and we have a hole in the budget. If there is a budget surplus, it is possible to fill this hole and give entrepreneurs the opportunity to reinvest,” said D. Arlauskas.

However, the economist proposes to use every unplanned euro to reduce public debt.

“Because if we have a large public debt, it will be difficult for us to borrow when we need it, and she will certainly need it,” assured A. Bartkus.

Source: The Delfi





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