Lithuanian president: 'We won't be more secure by replacing butter with cannons'

VILNIUS - Lithuanian President Gitanas Nauseda said on Thursday that the tax reform being debated in the parliament should not only help boost defense spending but also reduce income inequality.

"While implementing the tax reform, it is essential to maintain a balance between social and economic policy needs. We will certainly not become more secure by replacing butter with cannons - only increasing poverty and social exclusion," Nauseda said in his annual State of the Nation Address.

"Therefore, the tax changes prepared by the Government and approved by the Seimas must also help to reduce income inequality," he added.

If approved by the parliament, the government's proposed package of tax changes is expected to raise an additional 278.8 million euros for the state budget in 2026 and 551.9 million euros in 2027.

Most of that money is expected to go toward defense. Lithuania plans to spend 5 to 6 percent of its GDP on defense between 2026 and 2030.

Nauseda noted that the most vulnerable groups in society have recently raised "legitimate concerns" about the rising risk of poverty, while soaring living costs, especially housing expenses, are putting increasing pressure on lower income earners.

The president reiterated his call for reducing the personal income tax burden for employed and self-employed parents as part of the tax overhaul.

"It would provide meaningful support to Lithuanian families - the backbone of our society," he said.

He also proposes earmarking at least 20 percent of the planned surplus in the budget of the state social insurance fund, Sodra, for indexing the individual component of pensions.

Nauseda said the tax reform should help secure funding for public services, but whether it succeeds depends on several factors.

The president called on public institutions to spend taxpayer money more carefully.

"When the state turns to the people, it should also take a critical look at itself. How much money is simply going up in smoke? How much do we overpay for goods and services in public procurement? How much is wasted on so-called qualification upgrades that end up as banal parties or idle retreats?" he asked rhetorically.

He also stressed that the changes should not significantly affect consumption and investment.

The government's tax reform package includes changes to real estate taxation, three progressive income tax rates, a one-point hike in corporate income tax, taxation of some insurance policies, adjustments to value-added tax rates, and the introduction of a so-called sugar tax.