Major business organizations are withdrawing from the national agreement on reforms, signed with the government two years ago, saying that recent tax changes violate the deal.
The government signed the agreement ‘on reforms necessary for the country's progress’ in 2017 with five business associations and two trade unions, committing to coordinate tax reforms.
“In light of the disrespect for signed agreements, social partners and commitments, [...] we are forced to withdraw from the agreement,” the business organisations said in a statement on Friday.
“The ruling majority [in the parliament] and the government have not implemented structural reforms in the public sector [...] and taken the easiest way of raising taxes. We consider such policy to be short-sighted and leading in the wrong direction,” the statement reads.
The business organisations say that the recent tax changes were made hastily, and their calls for dialogue fell on deaf ears.
The business organisations include the Investors' Forum, the Lithuanian Employers' Confederation, the Lithuanian Confederation of Industrialists, the Lithuanian Chamber of Commerce, Industry and Crafts and the Lithuanian Business Confederation.
In December, the Lithuanian parliament raised the corporate tax rate for banks and slowed down the planned income tax cuts, drawing criticism from the business community.
‘We haven't broken a single promise’
Lithuanian Prime Minister Saulius Skvernelis has rejected the criticism, saying that the business sector itself did not contribute enough to the implementation of the agreement.
“The government has implemented all of its agreements, which we cannot say about the other side. But we have to speak specifically. [...] We would really like to hear where we broke what,” Skvernelis told journalists on Friday.
He said that taxes for business had gone down and that the sector did not get involved enough in fighting the black market.
“Over those years after we signed the agreement, we have reduced the tax burden for them [businesses] by around 0.5 billion euros, not to mention the reduction of administrative burden,” the prime minister said.