People against real estate taxation

  • 2009-04-02
  • By TBT staff and wire reports
VILNIUS - The majority of Lithuanians disapprove of the ruling coalition's plans to levy a tax on real estate, but are less opposed to the idea of introducing progressive income tax, a recent opinion poll by Prime Consulting has shown.
According to the poll, which was published in Veidas magazine, 78.8 percent of residents of the country's five biggest cities and towns said they did not back the government's plans to introduce a real estate tax, with the largest percentage of opponents being in Vilnius.

Just 1.8 percent of respondents approved of plans to tax personal real estate. Ingrida Simonyte, the tax specialist undersecretary at the Ministry of Finance told The Baltic Times real estate taxes are being seriously considered, but progressive taxes "don't have much of a scope in the country at the moment."
"It [real estate tax] intends to widen the base of the tax so as to include all the residential people 's natural persons who own their home. I can't say anything about the tax rate or non-taxable minimum 's it is still too early to say," she said.

Simonyte argued this would not increase the tax burden on people.
"It depends on when and how you implement this taxation. It will mean that someone has to pay taxes that they weren't paying before, but there could be reductions in other taxes. You can design a different solution. This is not like raising VAT or other taxes for the crisis, but an economic decision."
Prime Minister Andrius Kubilius said the government could start introducing real estate and progressive income taxes by June.

"We would discuss those issues based on the coalition government's program, which provides for introducing a tax on real estate; decisions on it [the tax] must be taken this year. The coalition government's program does not envisage progressive taxes, but we will discuss all this in June," Kubilius said.
Simonyte said the real estate tax is in effect a progressive tax because it taxes those able to buy real estate.
"Real estate tax is good for when you have flat tax because people with higher income have more estates and pay more taxes by real estate. It is another way around to the same solution."

The poll showed about two-fifths, or 39.6 percent, of residents of the five cities and towns thought progressive taxes were necessary. Another fifth, or 21 percent, in principle supported the idea, but said they wanted more information on how the progressive tax system would work in practice.
Some 10.6 percent of all respondents said they were strongly opposed to progressive taxes.
All employment-related incomes in Lithuania are now taxed at a rate of 21 percent. Private individuals currently pay no taxes on real estate.

Prime Consulting polled 500 residents of Lithuania's five major cities and towns between March 23 and 25.