Lithuania's minimum wage, tax-free income should rise at similar rates – finmin

VILNIUS – Lithuanian Economy and Innovation Minister Ausrine Armonaite's proposal that the country's minimum monthly wage should rise to 800 euros next year and the tax-exempt income threshold should be increased to 740 euro is not financially balanced, Finance Minister Gintare Skaiste said on Thursday.  

This year, the non-taxable income threshold is set at 540 euros and the minimum monthly wage stands at 730 euros before tax or 550 euros after tax.

Skaiste believes that both should increase at similar rates.

"Proposals, such as the (economy and innovation) minister's proposal to increase the tax-exempt income amount almost four times faster than the minimum wage, are very costly for the budget," the finance minister told LRT Radio.

"So, the tax-exempt income amount should increase at a similar rate as the minimum monthly wage to ensure the long-term financial sustainability of the state budget," she added.  

Earlier on Thursday, Armonaite said that the minimum monthly wage before tax should rise by 70 euros to 800 euros and the non-taxable income threshold should go up by 200 euros to 740 euros.    

According to the liberal minister, this would be a much more balanced proposal, because the state would share the burden of rising wages with employers.

The Bank of Lithuania said in July that the minimum monthly wage could rise by 18.9 percent, or 138 euros, to 868 euros next year.

The central bank added, however, that given the current high level of economic uncertainty, more cautious solutions could be sought, such as postponing decisions on the minimum pay or increasing it gradually. 

The Tripartite Council, which brings together the government, employers and trade unions, has already started discussions on a minimum wage increase, but the final decision will have to be made by the Cabinet.