Parliament rejects proposal to cut VAT to 18 pct

The value added tax will remain 21 percent in Lithuania after the country's parliament on Thursday rejected the liberals' initiative to cut it to 18 percent from 2020, a level that was before the 2009 crisis.

22 lawmakers voted in favor of the parliament starting deliberation of the proposed amendments to the Law on Value Added Tax, 18 were against and 33 abstained.

Edmundas Pupinis, representing the opposition conservative Homeland Union – Lithuanian Christian Democrats, believes cutting the VAT and subsequent lower budget revenue would stop the growth of wages for public sector workers, especially for teachers.

Jurgis Razma, a member of the parliamentary Committee on Economics, estimated that the state budget would lose around 0.5 billion euros in revenue if the VAT was cut to 18 percent.

The last attempt to reduce the VAT to 18 percent was made in the Lithuanian parliament in November, 2017.

Economists and legal experts also discussed the issue in the middle of 2014. President Dalia Grybauskaite then criticized the plan, stating that the solution of social problems, not cutting individual taxes, should be a priority.