Jakeliūnas: two outrages regarding the tax reform

The Governments proposed tax reform are contradicting the election-winning Lithuanian Peasant and Green Unions (LVŽS) proposed program. Their authors either do not understand what they are doing and/or are deliberately interested in providing more help to employers, rather than employees.

This opinion was expressed during the DELFI television show “Gyvai” Stasys Jakeliūnas the chairman of the Parliamentary Committee on Budget and Finance, who was just last year perceived as the most tangible candidate for the post of Minister of Finance.

We would like to remind you that, the Government presented several proposed changes for the tax plan last Friday received much criticism, as the proposal to merge the contributions paid by the employer and employee was removed. However, the proposal to remove several value-added tax exemptions, as well as several the removal of tax benefit regarding children remained. Moreover, the child money in regards to “Sodra” exemption for the 100 euro party of the wages and etc.

When asked on the matter of the proposals made by the Government in regards to the taxes S. Jakeliūnas referred to them as a correction. According to, the politician the election program of the LVŽS was not an only an oral tax plan.

“Yes, the changes, reconstruction and the partial corrections – this is what we can call it. The preliminary proposals of the Government in regards to the field of business taxation slightly equalized the modes – it’s getting us closer to some sort of a transformation. But in other instances – the removal of certain tax benefits such as the personal income tax, in the labour relation field – are simply corrections” – stated the politician.

According to, Committee chairman while the Governments proposals bring both positive and negatives things to the table. One of the received harsh criticism from S. Jakeliūnas.”One thing, the new non-taxable contributions amount pain to “Sodra” I would say is a slap to the face” – noted the parliamentarian.

The before mentioned point in the LVŽS election program, according to the politician was one of the key points regarding the merging of the contributions made by the employer and employee to “Sodra”.

Only in that instance it would be clear what is the actual wage, how much it costs to the employer, and how much is actually earned by the employee and how much tax does he actually pay. The introduction of the NPD contribution to “Sodra” only illustrates the necessity of this kind of merger.

The Committee chairman further noted that this proposal would not be implemented.

“The proposal is based on the understanding that the workers will near more, as 100 euros of the wages will not be taxed as contributions paid to “Sodra”. However, the current situation technically classifies the tax part for the employer at 31 pct., and 3 pct. for the employee. Thus, the benefit of not taxing the first 100 euros for the employee is 3 pct. or 3 euros, while bringing a 30 pct. benefit to the employer, which is ten times more than for the worker. It is highly likely that the money will remain for the employer, as benefit which they will hardly share or in other words increase wages for the employees for which there are hardly any assumptions” – stated S. Jakeliūnas.

The interlocutor doubted that the authors of the proposal understand its essence:”This example illustrates the conscious efforts to promote the benefit of the employers, thus making concessions on their behalf and/or the lack of the ability to understand how the system truly works, what taxes are and what is insurance. Suh a proposal can hardly be defended as acceptable” – he noted.

According to, the politician he would understand if there was a conscious effort made deliberately to lessen the burden on employers. However, no such provision existed in the LVŽS election program.

Moreover, S. Jakeliūnas was doubtful in regards whether the vice-minister of Social security and Labour understood this while presenting the novelty before the Parliament. Since the arguments made by here gives ten times greater benefits to the employers would should in their mind share them with the employees, which even in the fraction was looked upon with a sceptical eye.

“Perhaps, this is a deliberate act. However, it is not compatible with the goals set in the program and other decisions that were offered in the election program” – the politician criticized the decisions of the Government.

According to, the politician contributions without taxing a part of the income would result in a winning situation not for the employee but for the employer. Additionally the system itself will become much more complicated.

Moreover, S. Jakeliūnas is doubtful about the proposed “floor” introduction. In other words, the premium would be paid on the amount that is not less than the minimum monthly salary, as it is unclear how the contributions will be paid to the employees which that work several jobs at the same time.

According to, the politicians calculations because of the NPD applied to the “Sodra” contributions to the budget would not even collect about 100 million euros, therefore the politician wondered what would be utilized to offset the introduction of this “floor”.

Regarding to the question if the Peasants and Green Union have forgotten their election promises, the politician stated:”Although, not everyone has forgotten the Government unfortunately does not comply with its electoral commitments which is truly disappointing. Moreover, there is another proposal which is even more disappointing, regarding the contribution ceiling of “Sodra” which stated that the contributions paid to it would not be calculated from wages higher by 120 times the minimum wage per year <….>” – he stated.

Furthermore, the chairman of the committee has pointed out that the “ceiling” will be removed back in December, in regards to the social model overall. Since currently the introduction to implement a new pension scheme and/or second-tier pension funds are still not on the table.

“The implementation of the “Sodra” ceiling will once again reduce the contributions paid to “Sodra”, and higher-income workers will be allowed to bypass the system twice – through the ceiling and through the fact that they will accumulate twice as much extra money while their pensions will not be reduced. Such a situation is illogical but the Parliament did adopt the decision to reduce the “Sodra” ceiling. Unless the circumstances change without making any decisions regarding the second-tier pension, the pension system ceiling will be offered again. I, asked the Prime Minister why this is done and if they understand the implications and lack of political logic. Thus, he promised that this would not be proposed. However, regardless of this this was presented last Friday and the Prime Minister did break his word. Which is twice more disappointing, that the Prime Minister did so and then refused” – stated S. Jakeliūnas.