“Sustainable financing for defence is now around 3.5% after this tax reform from 1 January next year. If we need to get defence spending above 5%, we will need to borrow more than a billion, maybe even two billion (euros),” the opposition MP told Žinių radijas on Friday morning.
Kasčiūnas also criticised the overall tax reform greenlit by the Seimas Thursday as “clunky”. Despite that, he said, the Conservative group backed the amendments related to increased defence spending.
“But what concerns personal income tax, that aggressively progressive taxation, we have a very serious challenge here and we will continue to have it as (…) our economic growth may slow down. (…) This is where we could lose the competitive battle with other countries that are fighting for brains,” the politician said.
Next year, Lithuania’s defence budget is expected to receive an additional revenue of over EUR 300 million resulting from the changes to personal income tax, increased corporate tax rates, new insurance and sugar levies and corrections of tax rates for non-primary properties. The sum is estimated to exceed EUR 500 million in 2027 and in the following years.
Lithuania plans to spend 5-6% of its GDP for defence annually until 2030.