News2019.09.18 16:00

Lithuanian PM and president say they found common ground ‘on all’ tax and spending proposals

Vaidotas Beniušis, BNS 2019.09.18 16:00

Lithuanian Prime Minister Saulius Skvernelis says he and President Gitanas Nausėda have found some agreement about the president's spending and tax change proposals. Without commenting on any specific tax changes, the two say they agree on pursuing ambitious welfare policies.

“We have found compromises or common denominators on all proposals in one form or the other – on all,” Skvernelis told a press conference after a meeting between government representatives and the president.

Lithuanian President Nausėda proposed earlier to the country's Seimas to increase social security spending by 100 million euros next year, mostly for increasing pensions and disability benefits.

Read more: Lithuanian president's tax proposals met with praise and scepticism

The president suggests raising the additional funding by planned payroll tax cuts, slicing diesel fuel tax exemptions for farmers and increasing taxes for non-employment-related income.

On Wednesday, neither the president, nor the prime minister spoke of specific figures or tax rates, only underlining that they agreed on the need to reduce poverty and social exclusion.

Nausėda also noted that the expected economic slowdown cannot be used as a justification for failing to implement ambitious social policy plans.

“It would be wrong to hide behind the growth slowdown and justify not doing or postponing our ambitious plans for a year or more with the changing macroeconomic situation. I think it would be unfair,” Nausėda said.

Lithuania is not going through an economic crisis, the president said, “only a cyclical economic slowdown” which is not an obstacle to the proposed plans.

“Even the growth [that we have] provides enough space for an active social policy that, in my mind, should be a clear economic policy priority right now. I believe we can do a lot working together in that direction. I hope – and I see clear signs already – that separate government institutions can agree on these priorities,” Nausėda said.

He once again reiterated that he would propose raising the indexation coefficient for pensions, so that incomes of the retired people grow faster than wages. The pension indexation formula, introduced last year, pegs pension increases to wages.

The president and prime minister also voiced their determination to fight against unjustifiable tax rate variations and dubious tax exemptions. At the same time, Nausėda pledged to stick to fiscal discipline.

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