Grybauskaite refers back VAT reduction amendments

VILNIUS - Lithuanian President Dalia Grybauskaite has referred back to the Seimas the amendments to the law on VAT as she is against reduction of VAT for public transport.

According to the president, the state still cannot afford applying a tax exemption on public transport tickets. Grybauskaite says that the tension on the global financial markets does not subside. This will have influence on Lithuania's economic situation and might impede the recovery of the economy. All political forces must make financially-responsible decisions regarding the budget for 2013, therefore, she refers back the amendments for reconsideration at parliament.

"We are going through a financially tough period, the possibilities of the state are limited, therefore the public money has to be spent rationally and carefully. Approving the VAT amendments, the Seimas gave in to the pre-election financial populism and confused several things of different importance in one law," she says.

It has been estimated that the VAT reduction for public transport tickets would cost almost 70 million litas (20.3 million euros) for the state budget but the users of public transport still would not be guaranteed cheaper tickets. It has been proved that various VAT exemptions are useful for producers or service provider rather than for consumers.