Lithuania’s central bank head has welcomed President Gitanas Nauseda’s recent proposals to increase the incomes of low-earners. However, he is more critical of the government’s proposal to temporarily cut the value added tax on central heating.
The measure is “a good thing”, Gediminas Simkus said, pointing out that other EU member states had also taken similar steps. However, the measures should be targeted at the most vulnerable households.
“It’s important for the assistance to be as much focused on the most vulnerable and the most socially sensitive groups of people as possible as they are the ones who need assistance most,” Simkus said.
On February 2, the government decided to propose to the parliament to temporarily introduce a zero VAT rate on central heating. The change would be in force from January 1 until the end of April when the heating season ends. Currently, Lithuania has a 9% VAT rate on central heating.
Simkus welcomed President Nauseda’s proposal to increase the non-taxable income threshold from 460 to 510 euros, saying that such a measure would benefit lowest-earners.
“I would like to go back to the Bank of Lithuania’s proposals we put forward last summer. We also said back then that the non-taxable income rate should be increased and to reach the minimum wage. Perhaps it’s a step in that direction, on that path. That’s a measure that matches the needs of the lowest-earners,” Simkus said. (LRT/Business World Magazine)