Lithuania’s Economy Minister Aušrinė Armonaitė insists that the government should fund any further raises in military spending from borrowing or “economic growth” rather than new taxes.
Lithuania’s defence funding is expected to reach 3.2 percent of GDP this year.
“We should stop with the taxes. We have already upped the corporate tax, excise duties, etc. The economy is growing, 2.2 percent this year and 2.8 percent is expected next year. Let’s not spoil it. Defence can be financed from economic growth, from better budget collection, and from borrowed funds as well,” Armonaitė told the radio Žinių Radijas on Thursday.
Moreover, the minister said, the unused funds of state institutions – which totalled 160 million last year – can also be used to finance defence. These funds, she said, can now only be used to reduce the budget deficit.
In August, the Lithuanian government allocated an additional 130 million euros for purchasing weapons systems. According to the Finance Ministry, this allocation will bring military spending to 3.2 percent of GDP this year.
A package of measures to finance defence was adopted in late June and it includes a 1-percentage point increase in the corporate tax (now 16 percent) and higher excise duties on tobacco, alcohol, and fuel.
Armonaitė is the leader of the liberal Freedom Party which is a junior partner in the current centre-right ruling coalition.
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