Lithua­nia op­po­si­tion MP: «The rul­ing ma­jor­ity mud­dles through a «foxy» bud­get»

Baltic News Network - - News -

For the fifth con­sec­u­tive year, Lithua­nia’s new bud­get, now for 2019, is de­scribed as «record» due to the size of sur­plus and the hefty al­lo­ca­tions to ed­u­ca­tion, health care, in­no­va­tions and re­duc­tion of so­cial in­equal­ity.

Fi­nance Min­is­ter Vil­ius Šapoka touts it for be­ing ori­ented to «strate­gic goals» of the state, whereas the op­po­si­tion sus­pects that be­hind the gen­eros­ity stands the com­ing elec­tions to mu­nic­i­pal Coun­cils, the Euro­pean Par­lia­ment and Pres­i­dent’s Of­fice, all due in the spring.

«The bud­get is likely to be ap­proved by the rul­ing ma­jor­ity, how­ever the draft raises many ques­tions to many. It seems to me it is part of the rul­ing Farm­ers and Greens’ ve­he­ment self-ad­ver­tis­ing cam­paign, yet it lit­tle ad­dresses the re­al­ity. The growth of salaries in many sec­tors is based on re­dis­tri­bu­tion of the re­sources, that’s how it is,» Linas Bal­sys, a MP from the Lithua­nian Par­lia­ment op­po­si­tion, told BNN.

«It is am­bigu­ous to speak about raise of cul­tural work­ers’ salaries af­ter the Fi­nance Min­istry sent let­ters to many cul­tural or­ga­ni­za­tions ex­hort­ing them to cut their ex­penses by 15 per cent,» re­minded. «The rul­ing ma­jor­ity mud­dles through a «foxy» bud­get», he added.

Ac­cord­ing to the bud­get draft, the state bud­get’s rev­enue is set to rise 19.7 per cent, or 1.516 bil­lion eu­ros, to 10.587 bil­lion eu­ros, and ex­pen­di­ture will in­crease 22.2 per cent, or 2.121 bil­lion eu­ros, to 11.681 bil­lion eu­ros. The state bud­get’s deficit will stand at 1.095 bil­lion eu­ros, up 2.2 times, or 605.369 mil­lion eu­ros, from this year’s planned deficit of 489.171 mil­lion eu­ros. The govern­ment’s to­tal tax rev­enue is ex­pected to grow by 30.1 per cent next year com­pared with this year to 8.019 bil­lion eu­ros. The value-added tax (VAT), the largest sin­gle source of tax rev­enue, should in­crease by 8.8 per cent to 3.85 bil­lion eu­ros.

To trans­late the num­bers into the real-life pic­ture, the min­i­mum wage should go up by 30 eu­ros to 430 eu­ros and the av­er­age pen­sion by nearly as much in 2019, child ben­e­fit, in­tro­duced in 2017, will in­crease from 30 eu­ros to 50 eu­ros per child un­der 18. The lat­ter mea­sure will re­quire an ad­di­tional 120 mil­lion euro from the bud­get and the in­dex­ing of pen­sions – an­other 220 mil­lion euro. The fi­nanc­ing of health sec­tor is set to in­crease by 280 mil­lion eu­ros, ed­u­ca­tion sec­tor will be al­lo­cated 185 mil­lion more, year-on-year, with the bulk of money to be used for salaries of teach­ers and schol­ars. When sum­ming up the bud­get, Lithua­nian Prime Min­is­ter Saulius Skver­nelis, called it «so­cially re­spon­si­ble» and said it will help «im­prove the qual­ity of life» for a large part of the pop­u­la­tion. «Im­por­tantly, the bud­get pro­vides for the struc­tural re­forms ap­proved by the govern­ment and the Seimas. These are ed­u­ca­tion, so­cial pro­tec­tion, health and in­no­va­tion re­forms and other im­por­tant things aimed at achiev­ing an im­prove­ment in the qual­ity of life and in­come growth for our peo­ple. This is a so­cially re­spon­si­ble bud­get,» he em­pha­sised.

The fast rise in bud­get rev­enue and ex­pen­di­ture is re­lated to the planned tax over­haul (the con­sol­i­da­tion of taxes on the em­ployee’s side), as well as the trans­fer of the fund­ing of the gen­eral part of the so­cial in­sur­ance pen­sion to the state bud­get, he in­sisted.

Dif­fer­ently from this year’s na­tional bud­get ,which fo­cuses on the low­est-in­come peo­ple, next year’s bud­get is ori­ented to­ward broader pop­u­la­tion groups, the PM noted. «Quite a large amount of money, more than 600 mil­lion eu­ros, is al­lo­cated for work­ing pop­u­la­tion, in­clud­ing each of us. We fo­cused on peo­ple on the low­est in­come in this year’s bud­get, but (next year’s bud­get) cov­ers the so-called mid­dle class as well,» said Skver­nelis, who is ex­pected to run in the pres­i­den­tial elec­tion un­der the flag of the rul­ing Farm­ers and Greens next year. «In ad­di­tion, we’ll form a re­serve of more than a bil­lion eu­ros and we’ll have it in place as early as next year in case, God for­bid, a cri­sis should oc­cur some­day. We’ll have a sur­plus bud­get and we’ll strictly ad­here to fi­nan­cial dis­ci­pline,» he said.

The Govern­ment head says that taxes for the em­ployed will be re­duced by 6 per cent over the next three years, a re­sult of the tax over­haul.

«Our aim is to cre­ate and main­tain 26,000 new jobs and spread the word about Lithua­nia as the Baltics’ most com­pet­i­tive coun­try in terms of labour taxes,» Skver­nelis un­der­scored.

Although Fi­nance Min­is­ter Vil­ius Šapoka es­ti­mates that the coun­try’s bud­get sur­plus will stand at 0.6 per cent GDP next year, the ex­act num­bers can be ad­justed in the fall. The Min­is­ter also pointed out that the Cabi­net «took into ac­count» and «re­flected» the on­go­ing in­ter­na­tional de­vel­op­ments in fi­nance mar­kets when draw­ing up the bud­get. «We have to ac­knowl­edge that the growth of world econ­omy is slow­ing down and the growth is not stable and even any longer. And the Lithua­nian econ­omy is not an ex­cep­tion from the whole pic­ture. Although we aim at a record-large new bud­get, we are ac­cu­mu­lat­ing through­out mone­tary re­serves. The 2008 cri­sis has taught us a valu­able les­son,» Šapoka said. Ac­cord­ing to him, Lithua­nia aims to ac­crue 1,5 bil­lion eu­ros in re­serves by the end of the next year.

Dis­agree­ing with the Min­is­ter claim­ing that the new bud­get is a re­flec­tion of «struc­tural and strate­gic re­forms» be­ing car­ried out by the Govern­ment, In­grida Ši­monytė, a Con­ser­va­tive MP and for­mer Fi­nance Min­is­ter in the 2008-2012 Con­ser­va­tives-led Cabi­net, lam­basted Šapoka and claimed she «can­not» re­mem­ber «a sin­gle re­form» car­ried out by the Govern­ment.

«I re­ally do not re­call any. Per­haps the min­is­ter refers to the over­haul of teach­ers pay, which is merely drag­ging of the blan­ket from one teach­ers to oth­ers. We call it re­dis­tri­bu­tion of re­sources, to em­ploy the eco­nomic terms,» Ši­monytė said.

«And I do not also un­der­stand why, for ex­am­ple, the in­dex­ing of pen­sions the Cabi­net is also called «a re­form». The laws en­vi­sion in­dex­ing, so what are we here talk­ing about?» the for­mer Fi­nance Min­is­ter won­dered.

Jus­tas Mun­deikis, econ­o­mist and lec­turer at Vil­nius Univer­sity, also ques­tions how the Cabi­net is go­ing to meet the bud­get tar­gets. «From what I see, two sources are fore­seen for that. The first is from the growth of econ­omy and the other is from the re­duc­ing of the shadow econ­omy. In­deed, we can plan grow­ing of the econ­omy, not re­duc­tion of shadow econ­omy,» he told BNN. «Thence a big risk that we can stum­ble upon the road and fail to col­lect the bud­get as we wish,» he added.

Although the Cabi­net said it didn’t mull any new taxes in the new year, how­ever there are ru­mours that the po­si­tion may change with a gap in the bud­get. In­tro­duc­ing higher tax for strong ale, a new tax for car own­ers and real es­tate own­ers has been among the raised ideas on the Lithua­nian Par­lia­ment (Seimas) floor this year.


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