Jorge Marcano | The Lithuania Tribune
On May 15th, in another sign of fiscal consolidation, the Seimas voted down proposals to VAT (Value Added Tax) percentages in a wide range of products. A majority of 73 MPs rejected the VAT cuts endorsed by President Grybauskaitė earlier in the year. The cuts proposed for the 2013 fiscal year had the intention of reducing the costs for a diverse numbers of goods and services, including all food products. The final voting did decrease the VAT from 21 per cent to 9 per cent on periodical and public transport services. As a point of consideration, the Kubilius’ administration will have an opportunity to revise and assess the latest proposal by the Saeimas. After such evaluation, the parliament will enact its final decision on the VAT rates.
In an attempt to explain the decision taken by the Seimas, Kestutis Glaveckas, chairman of the parliament’s Budget and Finance Committee, warned that approving all proposed VAT considerations on the initial proposal would incur the state over 1 billion litas in additional expenditures, considerably enhancing the budget deficit. “This accounts for more than 10 per cent of all revenues. Risks related to the public finance management would soar,” concluded the chairman. Presently, decreased VAT percentages are already applied to daily necessities like heating and medicines, all of which receive state subsidies.
On related news, Lithuania’s national budget revenue totaled 6.619 billion litas in the first quarter of the fiscal year. This figure represented a 2% increase over the projections for 2012. The Finance Ministry originally had projected 6.487 billion litas in revenues for the first month of the year. As it stands, such figures almost matched the target numbers estimated by the government during their budget previsions. The finance ministry projects 18.016 billion litas in annual revenues, excluding over 7 billion litas in EU funds and other assistances. Expenditures are estimated at around 18 billion litas during 2012.