The Lithuanian parliament on May 17 voted to raise the non-taxable income threshold by 80 euros to 540 euros as of July. This means an increase in income for the lowest earners whose annual income does not exceed the national average.
The amendments to the Law on Personal Income Tax were passed with 93 votes in favour, none against and eight abstentions.
The increase in the income threshold will bring an extra 16 euros a month to people earning the minimum wage and 12 euros to those getting a net monthly salary of 1,000 euros.
The measure will cost the state around 103 million euros in lost budget revenue this year. The average monthly salary in Lithuania currently stands at 1,679 euros before tax.
The Lithuanian parliament also voted in favour of revising the 2022 state budget for the second time this year.
The amendments were passed with 68 votes in favour, none against and 23 abstentions. They still need to be signed into law by President Gitanas Nauseda.
The government proposed the budget revision in a bid to mitigate the effects of inflation, provide aid to war refugees from Ukraine and maintain the railway infrastructure and national security.
This year’s budget spending was raised by around 1.47 billion euros, which would result in the deficit widening to 4.9% of GDP, up from the earlier projected 3.3%.
Some 973 million euros will be spent on anti-inflationary measures, including 570 million euros to subsidise gas and electricity prices for households.
The revised budget earmarks 370 million euros for Ukrainian refugees, with the bulk of the money going towards their social protection.
The 2022 state budget was first revised earlier this year to allocate extra funding for national defence. The Finance Ministry may propose another budget revision in the autumn if there are significant changes in the country’s economic development. (LRT/Business World Magazine)
