The most controversial requirement says that "individual enterprises" - privately owned businesses - make monthly contributions regardless of whether they are actively conducting business.
The amendments also require that small business owners who are employed by other businesses that already make SODRA contributions for that person must in effect pay twice. Small business owners who are disabled persons or are already collecting pensions are now also required to make monthly contributions.
According to the amendments, owners of individual enterprises have to make minimal monthly contributions of not less than 107.50 litas ($26.80) per month, "even if the enterprise is not active," or if the owner is employed by other companies that pay contributions for that person.
The old requirements were more liberal. Before being amended, the minimal contribution amounted to 69 litas, and "it was levied only in case the owner was not employed elsewhere," explained Anatolijus Lapinskas of the State Social Insurance Fund.
The only individual enterprises being exempted by the new rules are farmers, who are required to pay only 27.6 litas per month, because of a state budget allocation of 5 million litas.
These amendments may have a short shelf life. They are under attack from the Small Enterprise Council, some parliament members, and a Sunrise Commission working group under the Ministry of Economy concerned with improving the business environment for small and medium-sized enterprises.
Leading the charge against the Jan. 1 amendments is Saulius Zukauskas, head of the Small Enterprise Council and the Sunshine Commission working group.
"Zukauskas' position has always been that these changes should not have happened," Jonas Oskinis, assistant to Economic Minister Valentinas Milaknis, reported. "This whole turmoil was caused by [the parlaiment's] acceptance of the law. The position of the Ministry of Economy and the working group is that the changes were unnecessary, caused turmoil, and could lead to closure of too many small business, particularly individual enterprises, but the final decisions are in the hands of the parliament."
Laima Andrikiene, chairman of the fledgling Homeland People's Party, registered a correction of the State Social Insurance Law to the parliamentary secretariat, which if approved would ease the problems of some individual enterprises.
Firing off a press release, she called the amendments a "cruel action" intended to add 20 million litas to SODRA's coffers. She also chided SODRA for wasting money in the past.
"Since 1995 owners of individual enterprises who were pensioners of SODRA already had met the length of service requirements and weren't required to pay additional taxes for SODRA," she said. "By declaring support for small and medium sized business as well as market liberalization, the current government has introduced a new order, according to which pensioners and disabled persons who are owners of individual enterprises must pay state social insurance taxes in order to receive their entire SODRA pension."
"In the current economic situation it is not sensible to ruin those who are making their living," she said.
A new series of Sunrise Commission proposals would include new amendments that would exempt pensioners, disabled persons, and owners of inactive small businesses from contributions. Also, the commission thinks individual enterprise owners that pay contributions should receive payments in case of illness, maternity and health insurance cases.
"The involved sides have principally agreed upon the imminent decisions on exemption from Social Insurance contributions for businesses that lead no activity and the voluntary insurance principle for the owners that have reached pension age," said Jonas Oskinis. "The parties have also agreed that the contributions are to be related not to minimal wage but to the real income of the businesses as stated in their tax declarations."
The proposed amendments would also ensure that SODRA contributions were calculated differently using actual income declared to tax authorities irrespective of the minimal monthly average threshold.
The pension age, currently 61 for men and 57 for women, is slowly being increased. By 2009 the ages will be raised to 62 and 60, respectively, although there are government discussions about expediting that change to 2004.
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