The Lithuanian Free Market Institute has examined the Draft Government Decree which proposes the rejection of the Draft Law on Amending Article 7 of the Law on Immovable Property Tax aimed at refusing Immovable Property Tax exemptions on state-owned or municipal immovable property as well as that owned by the Bank of Lithuania. The refusal of exemptions is seen as a means of encouraging the Bank of Lithuania and state and municipal administrations to seek efficiency in utilization of assets under their responsibility.
In LFMI’s view, the claims that the provisions of the Draft Law would make the regulation flawed are unjustified, because under the proposed regulation municipalities will be able to fix the tariff for immovable property at their disposal. Given that the Immovable Property Tax will be paid by municipalities themselves, the proposed regulation will not create incentives to set excessively high tariffs. Moreover, the refusal of exemptions is expected to result in higher efficiency in utilization of assets owned by the State, municipalities or the Bank of Lithuania, because additional expenditure on the tax levied on unused immovable property will create incentives to seek efficient and rational use of property.
Therefore, LFMI calls for the refusal of Immovable Property Tax exemptions on the aforementioned institutions.
The full position paper (in Lithuanian) is available at http://www.llri.lt/naujienos/ekonomine-politika/ekspertize-del-nt-mokescio-lengvatos-valstybiniam-turtui/lrinka