The Lithuanian Parliament’s ruling coalition is fishing for additional votes to pass a new budget, which should take place in two weeks.  At the moment the ruling coalition led by the Conservatives has a fragile majority of seventy-two votes out of currently 139 parliamentarians (there are 141 seats, but two seats are still to be contested). 

The opposition one-man Labour party with ten MPs expressed their readiness to support the proposed budget if their conditions were met.  However, not everybody is satisfied with this new cooperation.

During his interview to the Public Radio on 3 November the Prime Minister Kubilius admitted that if the 2010 Budget would not be passed in the Parliament in two weeks he would not be able to continue to carry out his duties.  According to him Lithuania’s public finances would face a complete collapse. 

Kubilius said ‘I will definitely not be able to work. And I truly do not think that the parliamentary opposition could work if they make such decisions. A collapse, which will hurt Lithuania’s people painfully, can be triggered very easily. Then it would be much more difficult to solve the problem, after the collapse. The extension of the so-called this year’s budget over to next year would mean one thing for Lithuania – no pensions would probably be paid starting from February. This shall be understood by those who intend to vote against the draft budget submitted by the government’.

On 20 October the ruling coalition invited the Labour party to start consultations on securing their support for the budget.  On 2 November the coalition appointed a task force of the four ruling partners for holding talks with the Labour Party’s parliamentary group over support to the ruling bloc.  The Prime Minister Andrius Kubilius noted that some of the Labour Party’s proposals are beyond feasible.

The opposition Labour Party declared that it would not ask for any political posts in the cabinet and in Seimas for their support.  Everything what they wished for was to adopt some of their proposed draft amendments before the national budget for year 2010.

The amendments provision which made up from about 60 amendments include reductions of the VAT to seven percent for businesses competing in the domestic market with those selling imported goods and those that export their production and services to foreign states.  The party suggests reducing income tax and the State Social Insurance Fund Board tax to ten percent and profit tax to five percent and taxing the dividends fifty percent.

The party also proposes to decentralize energy companies and liberalize the market.  According to the Labour, energy companies should pay a profit tax depending on their turnover instead of the asset value, as is currently the case.

On 2 November during a press conference the maverick Russian born founder of the party Uspaskich, who is currently a Member of the European Parliament said that if adopted this plan would generate 2.5 billion litas in revenues and create 50,000 jobs, additionally creating another 70,000-80,000 in 2010.

MEP Uspaskich who is currently worth about 300 mln litas, suggested to pawn his personal property if the plan would not work.  However, he admitted that he has to talk to his wife first.  During the press conference he said ‘I can at the least guarantee my portion what’s my wife’s I cannot pawn, I just had this idea off the top of my head. But what’s important is not the value, but that a person is willing to put all his property up as a security, meaning I guarantee and have faith in my programme. I’m not saying that my business will cover for a failure, what I’m saying is I’m giving everything up,’ the Public Television reported.

Even though some of the proposals are worth considering the PM Kubilius expressed his doubts about the others  ‘But some proposals, at least from just looking at them with a political eye, seem to appear out of context.’  The economists also have also expressed their doubts about the plan.

Never the less, the Labour party have issued a warning that it would not support the ruling coalition unless all amendments are considered before the vote on the Budget.  The prime minister said he’d previously seen the Labour Party’s faction as constructive in their actions, but said this particular belief trembled after seeing their economic revival plan last week.

“I see a certain difference between our talks with the Labour Party’s faction here, in the Seimas, and between the public attitudes when their delegated Member of the European Parliament (MEP) returns here,” Kubilius said, referring to Uspaskich.

The Conservative party Honorary Chairperson and the MEP Landsbergis is critical of doing anything with the populist Labour party.  In an open letter to his party members he commented on decision to accept votes from the Labour saying that ‘I have a feeling that we stepped into a thing which I don’t want to mention’.

Some of the observers are convinced that the Labour party is not intending to support the new coalition, and that is a fantastic an opportunity to show to its voters that it is active in proposing resolutions in combating the crisis.  On the other hand Uspaskich is interested in forging closer relationship with the ruling Conservative party since he is facing problems with possible tax evasion in his Labour party during the last elections.