The stability program by the Ministry of Finance delineates the following steps in improving the tax structure and optimizing the tax base in 2017:
- the consolidation of the tax base for social security contributions by transferring the payment of social security contributions onto employees;
- the consolidation of a pat of social security contributions that cover basic pension and the personal income tax;
- an increase in personal income tax levied on work-related income from 15 to 21 per cent and a respective reduction in social security contributions.
The Lithuanian Free Market Institute has examined the proposed model for the unification of the tax base for social security contributions, identified its strengths and weaknesses and proposed an alternative model that would allow to achieve the aims of increasing the transparency of the tax system and creating incentives to pay taxes without increasing taxation and the complexity of the tax system.
A complete analysis and the alternative model proposed by the Lithuanian Free Market Institute (in Lithuanian) is available here.
