Eurocommissioner Algirdas Šemeta: Lithuania successful enough in dealing with economic difficulties

However, he believes that the country should continue consolidating its finances and increasing its revenues. Moreover, Vilnius, among other things, could consider a possibility of introducing a car tax and perhaps other new taxes.

Macroeconomic imbalance procedures had been initiated against 12 countries for the first time this year, but Lithuania was not among them, the Commissioner said.

“Lithuania was not among those countries hence it is possible to state that Lithuania has been successful enough in dealing with the macroeconomic situation... Lithuania looks well enough in the general context. The growth rate projected for Lithuania this year will be the second largest [in the EU] after Poland,” he said at a news conference in Vilnius on Thursday.

Šemeta added that Lithuania should continue consolidating its finances.

In the Commission’s view, Lithuania’s possibilities to reduce expenditures are “rather limited”.

“Lithuania’s public expenditures are the third smallest across the EU. It is very important to direct those funds towards productive investment, in particular towards education, science, innovations, energy efficiency,” Šemeta said.

However, the Commission believes that Lithuania has room to increase its revenues, in particular in the light of its ‘shadow’ economy, which is one of the largest across the EU.

“The tax burden is one of the smallest in the EU. So there are possibilities to look for reserves here,” Šemeta said, noting that Lithuania and Estonia were the only EU Member States with no car tax and transport taxes one among smallest in the EU.

“The Commission advises Lithuania to tackle high unemployment through amendments to its labor legislation. Speaking about social exclusion, the Commission advises to eliminate incentives not to work,” Šemeta said.

He also urged to index pensions and to couple the age of retirement with life expectancy.

The Commissioner pointed out that budget consolidation measures should not slow down economic growth. “Public finances are improving gradually. But we have not reached the goals as yet.”

As far as taxes are concerned, the Commission urged Member States to eliminate unnecessary exemptions and to improve the collection of taxes.

Recommendations on taxes were proposed to 25 Member States, including Lithuania.

On Wednesday, the Commission issued an assessment of Lithuania’s convergence and reform program, which says that unemployment and social exclusion remain high in the country, hence it should seek to reduce poverty and social exclusion, increase work incentives and strengthen links between the social assistance reform and activation measures.