„Defence funding must be increased indeed, but raising the corporate income tax is hardly the best option at a time when the investment climate is deteriorating,“ Rudzkis told the radio station Žinių radijas on Monday.
„Our politicians think little about the investment climate and this is the case not only for the Government, we are talking about the entire political elite,“ he added.
According to the economist, additional funding for defence could be secured by cutting expenditure and bureaucracy. He believes that such decisions would also help attract more local and foreign investors.
„Our bureaucratic business control structure is inflated. The World Economic Forum has noted this burden as well. So let us reduce the number of institutions, the control apparatus, let us simplify the tax system. We could finance defence using these saved funds. We are in the European Union, so we will not make radical steps, but if we stand out in the good sense, we would encourage foreign and local investors alike to expand,“ the economist said.
As reported, Prime Minister Ingrida Šimonytė in mid-April held a meeting with political parties and business representatives regarding sustainable sources of funding for Lithuania’s defence. She afterwards announced that a special fund would be established to accumulate money to finance defence.
Moreover, the corporate income tax and the value added tax (VAT) may be raised by 1 percentage point, from 15% and 21% respectively.
In 2024, Lithuania’s defence spending stands at 2.75% of GDP, but it is sought to raise it to at least 3% in coming years.