Parliament squabbles over budget cuts

VILNIUS - After meeting 85 percent of expected state revenue targets, the Finance Ministry began considering budget cuts of about 1 billion litas ($250 million).

The government is currently preparing a proposal to cut budgetary expenditures which will be ready by the next parliamentary session in September.

"This week, the ministries and state institutions are preparing their proposals for budget cuts," said Jonas Cekuolis, a spokesman for Prime Minister Rolandas Paksas. "Then leaders of the parliamentary factions will have a meeting to discuss it."

The opposition forces in Parliament - Labor Democrats and Social Democrats - would like to see things move more quickly. According to them, the longer the Parliament waits to discuss such a budget-cut law, the more money will be wasted. The Labor Democrats are currently collecting signatures of MPs to support their demand for an extraordinary session so that debate can begin in August.

"An extraordinary session is indispensable," Labor Democrat MP Povilas Gylys told reporters. "The sooner we get this extraordinary session started, the less time we will lose."

So far, the opposition has only managed to collect a little less than half of the 47 signatures required to convene an extraordinary session and is lacking the necessary support by the Center Union faction.

"I cannot speak for all the centrists, but I personally am against signing because [in my opinion] there is no point in all of this," Central Party Head Romualdas Ozolas told the Baltic News Service.

Cekuolis said the decision to hold an extraordinary session was up to Parliament members. Still, he maintained that budgetary cuts should not be rushed and proposals should be considered carefully and analyzed.

"This should be prepared very carefully and not rushed into," said Cekuolis. "There is no room for mistakes on this issue."

The local press reported that if Parliament somehow drops the ball on budget cuts, Paksas has threatened to quit. It seems unlikely that the prime minister's own party would fumble, but Cekuolis somewhat supported this claim by explaining the budget is a "key document" and Parliament's failure to pass it would be a serious blow.

Even if the government prefers to not have budget cuts discussed immediately by the Parliament, the Finance Ministry has already taken action on the revenue collecting end of the system. On July 23, the Ministry of Finance and the Head of the State Tax Inspectorate Jaunius Ziogas "mutually agreed" that the latter should step down.

Eugenija Martinaityte, director of the Lithuanian Banking, Insurance and Finance Institute agreed that the state had "no other way than to cut expenditures," but felt the effects of dismissing the tax inspectorate will not be felt by businesses or the government in the short run.

"It's really about the [tax] system," said Martinaityte. "It's not well developed and it's not easy to change the process. The reaction [of the firing of the tax inspectorate head] will only be felt in the future. For the short term there will be no changes."

Martinaityte added that constant changes in the tax system also make it more difficult for businesses to figure it out and for the government to predict how much revenue will actually be collected. The results of a Lithuanian Free Market Institute survey released at the beginning of the year suggested similar ideas. According to the survey, the frequent changes in regulations and laws were seen as one of the major barriers to business development by two-thirds of the respondents.