Lithuania: Central bank urges tax review as population ages

Lithuania’s central bank, the Bank of Lithuania, has proposed a comprehensive review of existing tax exemptions, income and wealth taxation, and reducing the VAT gap to increase budget revenue as the population ages, BNS reports. Vaidotas Tuzikas, principal economist at the Bank of Lithuania, noted that Lithuania’s ratio of tax collection to GDP of 4.5% was currently lower than expected for the country’s level of development and could potentially double in the next 10-30 years. Tuzikas pointed out that reviewing non-taxable income thresholds, property taxes, and narrowing the VAT gap could significantly boost revenue. These moves would allow to prepare for demographic changes and for additional defence funding, the central bank argued.