“Speaking about defence funding and some tax matters, we have to take into account that these [changes] have to be announced six months before they take effect. Therefore, the window, as was the case with the tax reform, is closing. However, the extent of the draft law is not as vast as the tax reform and thus I think we can reach an agreement,” Nausėda told reporters in Brussels.
The head of state reiterated that he is “categorically against raising the value added tax (VAT)”. He said this would be an antisocial move, adding that the proposal to raise VAT seems to have been scrapped in talks.
The president instead favours a higher corporate income tax, as well as cutting some tax exemptions and ensuring progressive taxation to secure sustainable defence funding. Nausėda also believes that Lithuania could borrow for short-term defence needs.
On Wednesday, Prime Minister Ingrida Šimonytė held the third meeting with politicians and business representatives on defence funding and announced afterwards that a special fund could be created for accumulating finances for defence spending. In addition, she said that politicians, business representatives and NGOs are inclined to reach an agreement on a raise of the corporate income tax by 1%.
Lithuania’s defence spending stands at 2.75% of GDP in 2024 but in the coming years it should reach 3%.