Finance minister nominee says no reason to fear new corporate tax

  • 2005-05-11
  • From wire reports
VILNIUS - In his first interviews after being nominated to become the new finance minister, Zigmantas Balcytis tried to downplay fears of a new corporate tax and said that the tax reform proposal worked out by the coalition's political council was "not bad."

"In my opinion, the fears and risks of a corporate tax, which have led to controversy, are not that significant," he told the Lietuvos Rytas daily. "We can prove that the prospective corporate tax should not be considered as another turnover tax, and the introduction of the new levy will not violate the European Union directives."

The current coalition has reached an impasse on how to fill the budget gap once it decreases the income tax, which leading international economists, including the IMF, are advising it to do. The outgoing finance minister, Algirdas Butkevicius, tendered his resignation after his plans ran into opposition from the coalition's political council.

Contrary to Butkevicius, Balcytis claimed to support the new corporate tax, which would be levied on sales. "I do not intend to introduce any new things. We have fiscal discipline, which is mandatory for all; otherwise we would run into difficulties with the compilation of next year budget," he said.

"I believe that a parliamentary majority should make a decision concerning the reform package submitted to the Seimas [Lithuania's parliament]," he added.

However, the minister nominee pointed out that the tax was not the sole possibility to cover a budget gap, which would emerge following the reduction of the income tax rate.

"We have other sources, including the shadow economy, better tax administration. I agree that we should apply various measures," said Balcytis, adding that the government would "definitely" be unable to offset budget losses through these two measures alone.

The coalition's tax reform proposal, the most pressing issue facing the five-month old government of Prime Minister Algirdas Brazauskas, was "not bad," said Balcytis.

Speaking of the new corporate tax, which Brazauskas has opposed, he explained, "EU member states do not have much experience on this matter. We can defend ourselves provided that any controversy emerged," he said.

The prime minister nominated Balcytis at a May 5 meeting with President Valdas Adamkus. The president will announce his decision following a meeting with the candidate next week.

Balcytis, 51, graduated from the finance and accounting faculty of Vilnius University. His resume includes a position with the design construction bureau of the Food Industry Ministry, executive director of the National Philharmonic, manager of trade unions' affairs and the training center director, and an executive director of the Vilnius district administrator.

In 2000 he was elected to Parliament and was appointed transport minister in 2001. He was re-elected member of parliament in 2004.