PM says govt looks for sources to fund VAT cut for heating

“We are looking for ways to ensure that households using district heating services do not experience a sudden jump (in the VAT rate) from 9 percent to 21 percent. We have to make calculations and find financing sources. If such a theoretical possibility exists, the government will make the decision and table it to the Seimas,” he told reporters on Thursday.

The VAT rate on district heating and hot water services was raised from 9 percent to the standard 21 percent on June 1.

The prime minister, appointed to the post by the Lithuanian Farmers and Greens Union (LFGU), has promised to bring the 9 percent rate back by October and propose that it be raised to 15 percent next year.

The government plans to introduce a new 15 percent VAT rate in early 2018 and apply it to district heating and hotel services. Skvernelis underlined on Thursday that the government was sticking to this plan.

The LFGU and the opposition Homeland Union–Lithuanian Christian Democrats in early July signed a deal under which the ruling party pledged to bring back a reduced VAT rate on heating in exchange for the opposition party’s votes in favor of a state forest management reform. Finance Minister Vilius Šapoka has said that the 9 percent rate will be temporarily reintroduced for October and will remain in place through the end of the year.

Some politicians say that the reduced VAT rate is not socially just.

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