Prime minister: no tax increases planned, but some sectors may face budget cuts

Lithuania’s Prime Minister Mindaugas Sinkevičius has stated that the government does not plan to raise taxes for businesses or residents, though some sectors may see reduced funding to meet social commitments, LRT reports.

The new government’s programme no longer includes a previous pledge not to introduce new taxes during its term. However, Sinkevičius insisted there are no hidden intentions or plans to increase taxation. Instead, the government will seek internal reserves by reallocating the next year’s budget, with certain areas facing cuts to prioritise social goals.

Speaking after the first meeting with industrialists, Sinkevičius acknowledged that ambitious social promises—such as reforms to child benefits, free school meals, expanded informal education funding, pension increases, and poverty reduction—will require additional funding. He suggested that reallocating existing resources, rather than raising taxes, would be the solution.

Business leaders, including Vidmantas Janulevičius, president of the Lithuanian Industrialists’ Confederation, have expressed concerns that a left-leaning government might eventually turn to businesses to fund social policies. Janulevičius emphasised the need to focus on economic growth first, stating that social obligations should be fulfilled only if GDP rises.

Opposition politicians, such as Raimondas Kuodis of the TS-LKD faction, have criticised the government’s promises as unrealistic, calling them “a triumph of hope over reason” and “a new trend in social populism.”

Economist Eglė Stonkutė warned that Lithuania is already approaching the EU’s budget deficit limit. With defence funding exemptions set to expire in 2029, the country may face a fiscal gap. She cautioned that without new revenue sources, the government might again consider increasing business taxes, which could harm competitiveness. Lithuania has already dropped 13 places in global competitiveness rankings.