No new taxes in Lithuania, but ‘state finance must ensure sustainable economic growth’

Minister Rasa Budbergytė, who took over as finance minister in June, met with Robertas Dargis, the president of the Lithuanian Confederation of Industrialists, the country’s largest big business association. The Confederation of Industrialists is planning a series of meetings with politicians to see which party’s platform is in line with the interests of its members.

Budbergytė, a social democrat, caused some ripples in the business community in June when, right after assuming the office of finance minister, said that Lithuania would eventually have to reform its tax system and introduce levies on real estate and vehicles. She quickly qualified her statements, assuring that the reform was a task for a future government.

After meeting with the finance minister on Monday, Dargis said that while there were differences of opinion, they agreed on essential things.

“The main theme of today’s meeting – which made a good impression on me – was that we cannot look at state finances from the point of view of accounting only. The most important statement uttered today was that state finance and its management must create conditions for sustainable economic growth,” Dargis said.

“We all agree that there is no need to increase taxes in Lithuania, which we are not planning to do. The state has enough money, the main issue is using them for funding priority areas,” Budbergytė said.

The priorities are, according to the minister, reducing income gap, properly funding national defence and carrying out structural reforms that would ensure economic growth.

Dargis says he has discussed with the minister the possibility of export insurance and the need to ease access for businesses to finance. Lithuanian businesses would like to scrap tax on reinvested profits.

While Budbergytė expressed reservations about doing away with tax on reinvested profits, saying it warranted more discussion, she agreed that export insurance would help Lithuanian businesses. She also agreed that businesses could use other sources of finance than banks.

“In our effort to help the economy grow and be competitive, it is important to enable new alternatives and new sources so that small and medium-sized businesses have access to finance not just via commercial banks,” Minister Budbergytė said.

Dargis would not reveal whether the Confederation of Industrialists found the rest of the Social Democratic platform acceptable. He says he plans to meet with all the parties before October’s elections so that Lithuanian businesses had a better idea of what to expect from the next government.