Vilnius, Lithuania. This year’s Tax Freedom Day was held on the 8th May. The symbolic day is an opportunity to draw public attention to the massive taxpayer contribution to the maintenance of the public sector. In 2014, the total public expenditure per head (excluding EU funds) will be 12,640 litas. In comparison to 2013, this is an increase of a thousand litas, or nine per cent.
“We all have to pay taxes to finance government employees, health, education, and other state services,” says LFMI senior policy analyst Kaetana Leontjeva. “However, these funds are not sufficient, and there is constant talk in the public sector about a new tax on cars or unhealthy food such as chips. Increasing taxes is disrespectful to taxpayers. The best way for government to show respect to taxpayers is to use existing resources more efficiently to curb inflation in the public sector; and to increase accountability for the use of the revenue collected.”
“People often talk about the increasing cost of living because they always see and calculate how much they pay for bread, shoes or car tires,” Kaetana Leontjeva notes. “However, very few know how much public services cost for them, and how much tax in total they pay per year. Tax Freedom Day reminds the Lithuanian population that the highest proportion of their earnings go, not to food or housing, but to tax. To pay them, Lithuanians work more than one-third of the year. By the way: before you finish reading this text, the government has already spent 100 thousand litas.”
Tax Freedom Day is calculated according to the relative government spending burden rate, indicating the share of individual’s income, which is taken by the state and redistributed through the national budget and extra-budgetary funds. Each year, an estimate of LFMI Freedom Day tax is calculated in accordance with the budget law, and the Ministry of Finance projections for economic growth.