The Lithuanian Free Market Institute has examined a draft law no. 17-10218 (hereinafter referred to as the Project) amending Articles 6 and 7 of the Law on Immovable Property Tax no. X-233 and submitted its comments and proposals to relevant authorities.
The Project proposes the introduction of a progressive immovable property tax payable by natural persons on non-commercial immovable property, including residential houses and apartments, farmyards, garages, etc. Under the proposed regulation, a 0.5 per cent tariff would apply to the portion of the value of immovable property exceeding 220 thousand euro, 1 per cent would apply to the portion exceeding 300 thousand euro, and 2 per cent would apply to the portion exceeding 500 thousand euro.
In its position paper, the Lithuanian Free Market Institute called for the rejection of the Project due to the following arguments: a) immovable property does not always reflect the income of an individual; b) the need for a progressive immovable property tax is not justified; c) states that apply a progressive immovable property tax provide allow to deduct interest paid on the immovable property from the taxable amount; and d) there is a need to evaluate the potential increase in the costs for tax collection.
The full position paper (in Lithuanian) with further explication of the aforementioned arguments is available here.
