VAT increase for defense 'debatable', corporate tax should come first – Lithuanian defmin

  • 2024-03-28
  • BNS/TBT Staff

SIAULIAI – As Lithuania looks for additional sources of income for defense, Defense Minister Laurynas Kasciunas says a VAT increase could be considered, but the first step would be to increase the corporate tax, and then other might follow.

"I would certainly not rule out a VAT increase, but for the time being, I would focus on other taxes, on a different composition that would have the effect we need as we need an additional 400-500 million euros per year," the minister told reporters in Siauliai, northern Lithuania, on Thursday.

"We will certainly start with a higher corporate tax. And then we'll see the others," he added. 

Kasciunas believes the four alternatives for additional defense funding prepared by the Finance Ministry could be used to "create a composition" where an increase in defense funding to 3 percent of GDP "is possible even without VAT". 

"Corporate income tax is inevitably an integral part of this, and we will certainly not avoid it. The question is by how much," Kasciunas said.

In order to increase the fixed funding for national defense from 2.5 percent to 3 percent of GDP, The Finance Ministry has recently proposed four options for the state budget to raise additional revenue. These include increasing the rates of VAT and corporate income tax, scrapping some tax exemptions, and reducing municipalities' share of personal income tax revenue.