Tax Freedom Day in Lithuania Recedes Markedly in 2006

VILNIUS, MAY 9, 2006 – According to the Lithuanian Free Market Institute’s (LFMI) annual calculations, Tax Freedom Day in Lithuania has moved significantly later in the calendar and will fall on May 11 this year. In 2006 the average Lithuanian taxpayer has to work 131 days to pay the total tax bill imposed by all levels of government.
The Tax Freedom Day is a symbolic day in the year when the average income earner stops handing over all his income to the government and begins to make money for his own and his family’s welfare. It is an indicator of the tax burden in relative terms which shows what portion of the value created by the people is taken by the government to be distributed through the national budget and non-budget funds.
LFMI calculates the tax burden as the ratio of projected total tax revenues to net national product (NNP), based on the methodology used in other countries as well (USA, Canada, UK, etc.). The tax burden, calculated according to this methodology, does not encompass money expenditures and time costs incurred related to tax administration. Government borrowing is not included either, while in Lithuania it is constantly growing and may become a tax burden in the future.
This year Tax Freedom Day in Lithuania arrives even six days later than in 2005. This increase in the tax burden is the result of 2.5 billion litas larger tax revenues in the state budget than in 2005, growing income of the Social Insurance Fund and the Mandatory Health Insurance Fund and also a slower growth of gross national product compared to taxes. The tax burden calculated as the ratio of total tax revenues and NNP will account for 35.9 percent in 2006, as compared to 34 percent last year.
LFMI started the tradition of commemorating Tax Freedom Day in Lithuania in 1993. Since 1993, when the Lithuanian taxpayers turned to the government everything they earned until April 13, Tax Freedom Day has moved later in the calendar. Starting from 2001, Tax Freedom Day came earlier every year: on May 15 in 2001, on May 4 in 2002 and on May 3 in 2003. In 2004 Tax Freedom Day started to recede again: it came on May 8 in 2004, on May 5 in 2005 and on May 11 in 2006.
Tax Freedom Day in Lithuania since 1993
Based on LFMI‘s annual Tax Freedom Day calculations
April 13
April 22
April 27
April 19
May 1
May 13
May 16
May 16
May 15
May 4
May 3
May 8
May 5
May 11