2013-01-07 17:55

Lithuanian prime minister appoints group to look into cutting taxation on labor revenues

A working group appointed by Lithuanian Prime Minister Algirdas Butkevičius has until April to propose how to reform the country's tax system in order to reduce taxation on labor income.
Šešėlinė ekonomika
Taxes. / Andriaus Ufarto/BFL nuotr.

Butkevičius makes it clear that these measures may include certain reduced VAT rates, but insists that this would not adversely affect the budget situation.

"The working group has set itself the goal of reviewing the entire tax system by April 1 so that (...) newly drafted laws could be passed by July 1 and come into force on January 1, 2014," the prime minister said at a news conference on Monday.

"The aim of the working group is to cut the tax burden on revenues from labor. Also, certain reduced VAT rates will be included and considered," he said.

Butkevičius added that he personally insists that such VAT reductions should have no impact on budget revenue redistribution.

A 9-percent VAT rate now applies to district heating, books and non-periodical publications, the transport of passengers and their luggage, and newspapers and other periodicals. Government-subsidized drugs, and technical aids for the disabled are subject to 5-percent VAT.

The standard VAT rate has been unchanged at 21 percent since the autumn of 2009.

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