Lithuania's new government is planning to review all existing tax breaks and incentives, including the excise tax discount for diesel fuel used by farmers, Finance Minister-designate Gintarė Skaistė said, noting that the government loses at least 2 billion euros in budget revenue annually because of the measures.
“The plan is to review all incentives and assess how appropriate they are today. Some were introduced at a time when we wanted to encourage one or another business sector to expand,” Skaistė told LRT RADIO on Tuesday. “For example, we currently have a reduced VAT rate for hotels, because they are in a difficult situation, but the situation may change.”
The government is also planning to cut fossil fuel subsidies, meaning that the excise tax discount for farmers will likely be scrapped by the end of its term.
It will also aim to make the tax system “fairer and more uniform” for all types of business, according to Skaistė.
The government's draft programme released on Monday notes that Lithuania relies too heavily on indirect taxes for budget revenue and even fails to collect a significant part of them.
“The sources of tax revenue that are least harmful to the economy, such as property taxes and environmental taxes, are now among the most modest in Lithuania, so we will give priority to them,” the document reads.
The new government intends to consider abolishing taxes on reinvested profits and reduce the share of indirect taxes, such as VAT and excise duties, in government revenue.
Read more: Lithuania’s new government: focus on ‘real’ Baltic partnership, soft power, regional leadership
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