Evaluated Government plans: time to strap?

Real aspirations or imitation?

– A month ago, Prime Minister Gintautas Paluckas approved the composition of the excess requirements for business removal. Were there any real actions, or is it just a formality?

– The Business Removal Commission started operations and the Government has already praised certain shortening of procedures. But we noticed that the activities of that commission are still very small. We managed to shorten certain permission to build solar power plants. These are just the first steps, so it is not time to evaluate the performance of this commission. However, one decision that seems welcome to us is that this commission has ordered each ministry to reduce the costs of non -existent areas to save budget funds to fund more important functions of the state.

Ernest Einor. Photo by Personal Archive

The state should start with tax increases, but with saving in its holdings.

– Do you see signs that the activities of this commission will ensure that the reduction of the bureaucracy is a priority of the entire Government, not a draft ministry?

– So far, the function of reducing the administrative burden has been concentrated only at the Ministry of Economics and Innovation. Now the excessive requirements for business removal commission enables the entire Government to perform this function, as the head of the commission is the Prime Minister and the commission contains representatives of each ministry. But looking at the founding document of this commission, which describes its functions, shows that there is a lack of ambition and detail of what this commission wants to achieve and how its performance will be measured.

– How do you rate the idea of ​​the Ministry of Regional?

– We value this idea negatively, as the Government should just go in the opposite direction and reduce the number of institutions and give up unnecessary activities to save budget. The establishment of a new ministry would cost additional millions. In addition, the functions performed by the new Ministry are already performed by the Ministry of the Interior, a separate vice -minister who is responsible for regional policy, is the Vice -Minister of Agriculture, which is in curation of rural development issues. So the establishment of the Ministry of Regional is certainly unnecessary. It seems that this step is not for economic but for political reasons.

– And is the idea of ​​a campus campus that is now being suspended, do you think the state needs the state at this point?

– In our opinion, a solution is needed to save public costs: be it ministries or an existing real estate rental. This should show the analysis that the government should do. But the fact that the state’s property is now excessive and should be optimized.

Tax increases – not a way out

– Public sector salaries eventually became higher than private. How do you rate it?

– It is not easy to evaluate this, as the structure of the private and public sector is partly different in the size of a certain amount of competencies, as the public sector essentially employs almost only higher education, just because of the type of profession. However, it is worth noting that over the past few years, wages in the public sector have increased significantly faster than in the private. In addition, there were more than just salaries in the public sector, but there are much broader social guarantees. For example, those civil servants who have significant seniority and belong to the trade union can leave as much as 54 business days a year for their salary. Such social guarantees are certainly excessive.

– If the public sector continues to be blown up with all its salaries and social guarantees, can the state go bankrupt?

– It is worrying what is reflected in the state budget. The state budget is already in deficit, much more than the collection of taxes and that difference is covered with borrowed funds. So the state really needs to give up excess guarantees to civil servants and optimize their number.

– Because the state budget is deficient, it also has new tax ideas. How will this affect the economic environment in Lithuania?

– In our opinion, the state should start with tax increases, but from saving in its own holdings. It is also an excess state -owned property, both state -owned enterprises, land and excess social guarantees of civil servants, both a network of public services (schools, medical institutions), not adapted to demographic changes in Lithuania. So you first need to think about how to save in your holdings, and then start talking about additional charges. And specifically for taxes, they must be as much as possible in Lithuania’s competitiveness, simply because we are already in increased risk for investors due to geopolitical circumstances. If we want to get additional investment and new jobs, we would have to compensate for this increased risk with a much more attractive tax system than in neighboring countries.

Drives the state into the corner?

– Previously, the plans for the former Government’s intention to exempt the profit of the profit for investment were abandoned. How will this affect Lithuania’s investment climate?

– It is worth noting that even the taxation of the profit of the reinvested profit in the context of the region would be a compromise, as neighboring countries – Latvia, Estonia, Poland – have no corporate tax at all. They essentially charge only distributed profits – dividends. Lithuania wanted to make a compromise decision, that is, to exempt the share of the profit that is invested in the development of the company and the creation of new jobs. This was included in the Government program, but eventually these provisions were not left. This is very worrying, especially when hearing promises to increase profit tax and increase personal income tax. It would definitely hit Lithuania’s competitiveness.

– The EU has just set a goal of raising competitiveness, reducing administrative burden, gap in innovation and technology. What is the perspective of Lithuania in keeping with this competitive battle?

– Although the operation of the EU is also very important here, Lithuania, in turn, has a great freedom to reduce the administrative burden on companies. Because it has already been introduced much more additional requirements than those required by the European Commission. Businesses talk about complex public procurement procedures that cost not only business but also the state. Because the abundance of requirements, prohibitions and other administrative conditions must also be administered by the state. Thus, the abandonment of excess requirements would save extra money.

Heard expert suggestions?

– If the Ministries of Social Security and Labor are adopted, do you think the voluntary accumulation scenarios are possible?

– The reform that the new Minister of Social Security and Labor sees it would eventually significantly reduce the number of pension accumulations. This would reduce the income of many people in Lithuania in old age. The effects of the reform would not be out now, but after 20-30 years. Because in the future, Sodra will face major challenges to pay current pensions, as the number of employees will be much lower and there will be much more pensioners. The accumulation system could compensate for this, but as the conditions are to be not accumulated and withdrawn from the accumulation system, it will damage the well -being of future pensioners.

– It seems that the new Minister of Social Security and Labor Inga Ruginienė also announces more populist ideas. What would a four -day work week offer to the Lithuanian economy?

– Currently, certain solutions are certainly not in line with the challenges of the time and reduce the competitiveness of Lithuania. Although the aspirations are probably benevolent, they will eventually become harmful in the long term and will be harmful to the reduction of pensions, loss of jobs and decrease in the state budget income.

– Would it be saved if various privileges in the civil service were to be abandoned, certain holiday days?

– We estimate that one holiday day costs about $ 80 million to the state budget. euros. And specifically about the public sector, about the civil service, if the number of civil servants, which is constantly growing, would be returned to the level in 2018, the state budget would save about $ 50 million. euros per year.

– The Lithuanian Free Market Institute sent a proposal to review and abandon the provision of unnecessary functions and services of public authorities. Was there any reaction?

– We received a reaction a week ago. At the Government meeting, a resolution was adopted by which all ministries were obliged to look for how to reduce their expenses by planning next year’s budget, refusing unnecessary activities, functions and expenses. This solution really cheered us, as there are certainly many unused reserves in the state, how to save money and redistribute them to fund more important areas.