In order to reverse the emigration from Lithuania and increase immigration, by the diaspora, it is necessary to fundamentally change things in Lithuania. REAL change will only come with Governmental Unity, and a strong political will to change. The scope of this article only deals with the economy. Other things such as Info Wars, the Justice system and the treatment of workers as well as moral, patriotic and spiritual values will be the subject of a separate article. In order to accelerate the rate of growth of Lithuania we must undertake some serious reforms, tax rates need to be reduced in order to facilitate capital formation and job creation.
Cost Savings
1. Sell most or all government buildings in old town – move government into new efficient buildings. Do this in consultation with city of Vilnius – master plan for tourism. This would free up a lot of valuable tourist type buildings for tax paying enterprises.
2. Sell off (privatize) all government ownership of Rail (Lietuvos Geležinkeliai) and Mažeikiai and other government owned business concerns.
3. Cutting the size of the Parliament is a good idea. This would set an example. A symbolic pay cut would also be good. Cutting the numbers of staff would also set a great example of sacrifice. Cutting travel and office expenses would get back the public trust.
4. Review all Government agencies from a zero based budgeting point of view. Have them justify their existence and budgets. Eliminate duplication and unnecessary departments and personnel. Give remaining people merit based pay increases and bonuses amounting to a predetermined percentage of the savings. Government needs to be cut by 25% or more while raising the wages of the remaining public servants.
5. Consolidate schools and Universities – decrease administrative overhead. Increase teachers’ salaries with the percentage of the savings.
6. Tax amnesty to bring in the shadow economy from the shadows. Bring in the shadow economy by declaring a limited time frame for companies and individuals to come in out of the shadows. Back taxes to be paid up one two years back. Payment terms to be worked out if necessary, probation as part of the program.
7. Renegotiate and or refinance the present debt of the Government of Lithuania. To get better terms.
With these savings, the GOL (Government of Lithuania) will be in a great position to add a fiscal stimulus to Lithuania. As any good non soviet economist knows – private sector money has a greater velocity than government stimulus, and thus returns more to the economy. Paradoxically, it also increases tax revenue. This then leads to our next step:
Tax Relief
1. Remove all PVM taxes from food and a decrease on taxes on heat.
2. Income tax holiday on all Lithuanians, business owners up to a predetermined European Minimum wage. Suggest two years or more of a income tax holiday.
3. Tax credits payable in the future for creating jobs in large companies. Companies to be able to bank credits for a portion of the cost of hiring new employees.
4. Reduce and Cap the social security tax whatever is standard in Europe. U.S. the figure is $127,200
5. Reduce the Social Security Tax to 25%.
Other steps to improve the economy.
1. Develop a Marketing plan for selling Lithuanian products and services & train Lithuanian Diplomats, and the diaspora in how to sell these. Need to buy some marketing, TV, Newspapers, magazines for Branding Lithuania. Foreign Ministry (URM) to coordinate and help out with private industry. Have a contest for best Marketing firm to develop a branding plan for Lithuania. Invest Lithuania to be heavily involved in this.
A. Ecological Farm Products – cheese, butter, grains, mushrooms, meats, sausages, etc. Need these products licensed and government guaranteed for quality and purity.
B. Sell the Lithuanian Educational System – Medicine, Aviation hub – Centre of EU.
C. Tourism
D. Service economy – entrepreneurial ability,
E. Administrative centres.
2. Quit the assault on successful entrepreneurs. They are the job creators and we should admire them rather than envy and disparage them. Funny how we love foreigners, Branson, Gates, etc., but not our own. Enough talk about “Speculators” and income inequality. You don’t improve the country’s economy and well-being by making others poorer. The goal is to make everyone richer.
3. Do an all-out Marketing assault on Financial and other service and manufacturing industries to lure them into EU through Lithuania. BREXIT is a huge opportunity for Lithuania. Others are already out there and we need to beat them to the draw.
4. Encourage entrepreneurs to start a Lithuanian airline – Private not government – consider longer tax holiday to do this.
5. Consider a plan for a private ship registry. This in effect is a partnership with the Government and private enterprise.
6. Do not do away with the sidewalk sale of beer and wine – would loose a lot of tourists and revenue. Alcoholics do not usually drink there.
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Kęstutis Eidukonis is a member of the Commission of the Lithuanian Seimas and the Lithuanian World Community
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