Lithuanian gov't rejects idea of progressive income tax

The Lithuanian center-left government rejected on Wednesday a proposal to implement a progressive tax system.

The idea was rejected at the government sitting.

The Finance Ministry insists the current taxation system in Lithuania already has elements of progressive taxation due to different income tax thresholds.

"There's also a high probability that Lithuania would become unattractive for highly skilled workers, and payouts from capital gains would move to lower taxation countries, if the progressive income tax rates are applied," the Finance Ministry noted in a press release.

"That would harm Lithuania's competitiveness," added the ministry.

Initiated by the member of the ruling social democrat party, the idea has received initial backing at the Seimas, Lithuanian parliament, two weeks ago. The parliament is expected to consider the proposal again soon after receiving the opinion from the government.

In most cases, the parliament takes into account the negative provisions from the government and rejects the proposed bills.

Political analysts note, the idea of implementing progressive income taxation in Lithuania constantly returns before parliamentary elections.

Lithuanian general elections are scheduled for October next year.

The standard personal income tax rate in Lithuania stands at 15 percent. Endit