“I think there is a possibility to agree on a defence tax, unlike the tax reform, because I see the will of all political parties. And we have a great opportunity to do that in 2024,” Nausėda told Delfi TV in an interview on Wednesday.
The president also highlighted the need of a compensation mechanism for vulnerable groups of society once the defence tax is imposed.
“We need to start with the question of whether we are going forward with higher VAT [value added tax] or corporate tax, and what compensatory mechanisms will be activated once the decision is taken. For example, if we are talking about an additional percentage of VAT, this must be implemented together with measures providing for a reduced VAT rate on food products to compensate for the financial losses of the most vulnerable people,” Nausėda explained.
The president said he noticed that politicians are reluctant to debate the defence tax as they fear public reaction. But Lithuanians are aware of the need for defence and would tolerate the introduction of the tax, according to the president.
Next year, the National Defence Ministry will have a total budget of EUR 2.09 billion, including EUR 1.923 billion from the state budget and EUR 135 million from banks’ solidarity contribution. Lithuania’s defence spending is set to reach 2.75% of its gross domestic product (GDP).
Nausėda earlier said that it is now important to make the most of all opportunities to increase spending on national defence through borrowing. He suggested that a new defence tax could be introduced in 2025.
National Defence Minister Arvydas Anušauskas says the defence tax is necessary, but it is important to ensure its added value.