Lithuania’s new finance minister: Real estate and car taxes are coming sooner or later

Rasa Budbergytė
DELFI / Karolina Pansevič

Budbergytė’s appointment by President Dalia Grybauskaitė will become effective on June 21.

Budbergytė is replacing Rimantas Šadžius who has left the post to take up a job at the European Court of Auditors.

The new finance minister says that Lithuania will have to eventually introduce real estate and car taxes, because they bring in additional revenue and do not press down on economic growth.

“I think it will be necessary to review the tax system and it will probably be necessary to broaden the tax base, of course, not before the elections but after them… International experts point out that it is possible to introduce taxes that do not harm economic growth. These include real estate taxes as well as environmental taxes,” Budbergytė told reporters after meeting with President Dalia Grybauskaitė on Monday.

In its recommendations published in mid-May, the European Commission said that Lithuania should reduce the tax burden on low-income earners by shifting the tax burden to other sources less detrimental to growth, such as real estate and car taxes. The International Monetary Fund (IMF) has also repeatedly called on Lithuania to introduce such levies.

Former finance minister Rimantas Šadžius said in mid-May that real estate or car taxes would not be discussed this year as the term of the incumbent parliament was coming to an end and it would be up to the newly-elected legislature to address those issues.

No more raising minimum wage

The government should stop raising the minimum wage, Budbergytė also said during a press event following her appointment.

“I agree that the current draft proposal to increase the minimum monthly wage should be adopted and that should be the limit, which we should keep since the growth of labour productivity in Lithuania lags behind the growth of wages,” she told reporters.

“We need to avoid that trap, which some neighbouring countries have fallen into after raising the minimum monthly wage despite the lag of productivity growth. In my view, we have a similar situation in this respect,” she added.

The minimum wage, which has been raised several times over the last several years, will increase by by €30, to €380, as of July 1.

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