A report issued by the European statistics agency Eurostat earlier this week suggests that Lithuania's general tax level stands at 27.1 percent of the gross domestic product (GDP), as compared with the EU average of 38.4 percent.
"Without doubt, Lithuania has a reserve in the revenue part," the commissioner in charge of taxes, audit and anti-fraud told BNS in comment of the possibility of cutting budget deficit.
"Nobody's saying we should necessarily reach the EU average. However, in the light of the fact that we have the smallest burden and many areas are lagging behind due to low funding, one of the possibilities is to address the problems through relevant taxes, which are considered economy-friendly and not curbing economic development. According to tax theory, such taxes are property tax, environment taxes including automobile taxes," Šemeta said.
At the same time, he emphasized that labor taxes in Lithuania were not small and could stimulate employment, if reduced.
"If Lithuania ranks first in terms of low taxes in other areas, the country's social insurance, health insurance and income taxes taken together are about in the middle in the EU. In this case, there could be a solution to lower labor taxes and thus stimulate employment in Lithuania," Šemeta said.
Nevertheless, he acknowledged such decisions were unlikely in the light of upcoming general elections: "The deficit level has already been approved for this year, the budget is executed in a rather successful manner, so such decisions will probably be made by the new government after the elections."
According to the survey published earlier this week, the EU's highest tax level is reported in Denmark (47.6 percent of the GDP) and Sweden (45.8 percent of the GDP). Latvia's levels are similar to those in Lithuania (27.3 percent of the GDP), while Estonian taxes are higher at 34.2 percent.
In effect since 1 January, the real estate tax applies to properties valued at over 1 million litas (EUR 289,000). The automobile tax was discussed but never introduced.
Last year, Lithuania's state sector deficit – the gap between spending and revenues – stood at 5.8 billion litas or 5.5 percent of the GDP. The government wants to bring the indicator down to 3 percent in 2012.
