bnn.lv Latviski   bnn-news.com English   bnn-news.ru По-русски
Sunday 22.07.2018 | Name days: Marija, Marika, Marina
LithuaniaLithuania

Lithuanian capital Vilnius exerts to stave off bankruptcy

FaceBook
Twitter
Draugiem
print
(+1 rating, 1 votes)

Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RULinas Jegelevičius for the BNN

The worse for Vilnius in the circumstances could be only filing for bankruptcy, but Councilmen at the Vilnius Municipality coupled with the influential parliamentary Budget and Finance Committee’s members are scrambling to do whatever it takes to ward off the demise.

Vilnius cannot hide its vulnerability any longer

An immediate remedy to soothe the capital’s budgetary drought could be a hastened decision to funnel an extra 2% of the city dwellers’ personal income tax (PIT) into the capital’s empty coffers.

It, however, can relieve the thirst in the short-term, but won’t work in the long-term, unless the authorities rescuing Vilnius decide again to up the PIT part in the capital’s budget.

«We are totally bankrupt and it’s no longer possible to hide that,» Romas Adomavičius, vice-mayor of Vilnius, told members of the parliamentary Budget and Finance Committee (BFC) on Wednesday, October 15, pleading for help.

The bribe scandal-haunted vice-mayor insisted that the state should borrow more so as to cover its arrears to Vilnius.

«Maybe the state could increase its own debt a bit in rescuing Vilnius and cover with the money the arrears to the Vilnius municipality,»suggested Adomavičius.

Behind the LTL 1.6 billion (EUR 463 million) city debt looms Vilnius’ inability to live according to the city’s income, says Gintautas Paluckas, an influential Social Democrat and the party’s candidate in the nearing direct mayor election.

The former mayors – and especially Artūras Zuokas, the current mayor of the Lithuanian capital – Paluckas insisted, would go splurging public money and assume too big financial commitments.

«The sums in the most of the contracts Vilnius has signed up are way larger than the city can afford,» Paluckas criticized the current authority of Vilnius. «Plus, the city is eager to sign up for EU-supported projects, though it cannot commit to their co-financing by the volume that types of agreements foresee.»

The municipality EU-project contribution varies from 50 to 85%, depending on the project.

«So at the end of the day we have the exacerbating situation: Vilnius knowingly digs deeper in debt,» concluded the Social Democrats’ mayoral hopeful.

State ought to throw a lifebuoy to Vilnius?

Meanwhile, the Lithuanian Deputy Finance Minister Edmundas Žilevičius hinted at the committee hearing that the authorities might once again need to increase the proportion of revenue from personal income tax earmarked to the Vilnius municipality so as to tackle the debt problems Vilnius deals with.

«It will once again be necessary to discuss a possibility to hike (the proportion of revenue from) personal income tax,» the official said.«A rise of 1 percent equals around LTL 12 million (EUR .47 million)», he added.

According to him, with the PIT rate supplementing Vilnius budget raised by 6% from the year, up to 48%, to be exact, Vilnius will be able to scoop up an additional LTL 145 million (EUR 42 million) for covering the debt in 2015.

«So the total of the two last years will add up to LTL 250 million (EUR 72.4 million) for the purpose. The municipality is set to fulfill the PIT plan, as it has received around LTL 26 million (EUR 7.5 million) extra-revenues over the last three years,» the vice-minister concluded.

Banks to not lend Vilnius anymore

But Valdas Klimantavičius, director of the Vilnius Municipality’s Authority, cautioned the Lithuanian lawmakers that some serious roadblocks may lie ahead despite the alleviation the city will get from the tax. «All banks have refused to give the municipality any new loans…Vilnius is being plagued by the major problems: first, liquidity, which means that Vilnius cannot offset its revenues and expenses and, second, the too little PIT rate that goes to the municipality,» Klimantavičius pointed out.

The capital’s current accounts rose from LTL 327 million (EUR 94.7 million) in 2007 to a whopping LTL 1.6 billion (EUR 463 million) this year.

One of the reasons deeper miring Vilnius in debts, according to him, are the public transportation privileges, which, each year, costs the city roughly LTL 80 million (EUR 23.1 million).

Municipalities should get a bigger piece of the PIT cake

The ensued deliberations showed that most of the hearing participants would opt to make amendments to the Personal Income Tax Law so that a bigger part of the tax would be added to the local municipal coffers.

«Obviously, to Vilnius, the current system seems the most flawed. Just because personal income tax is paid in accordance with the declared location of residency, not the actual workplace. How it works now is in favor of the regions, but not (in favor) of Vilnius. If we amend the law, it should be working for Vilnius, but then the regions might be in a worse situation,» the Deputy Finance Minister reasoned.

Bradauskas, the BFC chairman, has proposed to draw up the PIT law changes, allowing Lithuanian municipalities more benefit from the tax revenue.

«Is it really hard to have the law working so that the tax is paid where the person works? Especially, taking into account that the infrastructure is used. Should the tax be split in half?»the committee chairman reasoned.

PM: Give Vilnius extra 2%

Vilnius had to deposit some LTL 326 million (EUR 94.4 million) of PIT revenues to other municipalities’ accounts last year, whereas the Lithuanian capital got only a mere LTL 26 million (EUR 7.5 million) of the tax revenue from other municipalities.

Statistically, each Vilnius resident, this year, gets as much as LTL 1865 8 (EUR 540) from the city’s revenue, while, in comparison, the amount for the statistical Riga and Tallinn resident added up to LTL 3029 (EUR 877) and LTL 3270 (EUR 947) respectively.

Lithuanian Prime Minister Algirdas Butkevičius also weighed on the issue at the end of Wednesday, October 15, saying that Vilnius‘ PIT part could be raised by no more than 2%.

«I believe that the decision will be passed during the draft state budget bill deliberations,» he said.

But Paluckas, the Social Democrat mayor race nominee, cautions that it can be not enough.

«Expenditure cuts are needed right now. But I reckon the mayor (Zuokas, who hasn’t yet announced on participating in the Vilnius mayor race) is not intending to do that. If I become a new mayor, I’ll overhaul all the current investment programs and will definitely scrap some of them, like the Vilnius Airline thing, Zuokas’ fad, but a boondoggle in fact,» said Paluckas.

Ref: 020/111.111.111.1820


Leave a reply

  1. Linda says:

    Obviously, Lithuania needs separation of its financial arrangements. Go to UK to see how they do. Personal taxation is the realm of the State and the city/town/districts function from levying Council taxes which cover domestic refuse collections, street cleaning, street lighting and business council tax, etc. Water fees are with the water companies. Lithuania also needs a watchdog (or several hounds) to check over the financial arrangements of both State and Councils. A further point specifically to the article is that Councilmen should be Councillors as these people can be male or female.

Week in Lithuania. Liberals ex-leader fails to recover confiscated cash

Eligijus Masiulis, a former Liberal Movement leader on trial in a major political corruption case, has failed to recover cash that was found and seized during searches of his home.

BNN summary of the week: open presidential election in Latvia and no more plastic bags for shoppers

BNN offers a summary of this week’s topical news in a variety of categories: Future; Change; Fight; Decline; Business; Progress.

SRS: cash register reform still stagnates, but has become much faster than it was last year

The cash registers reform continues stagnating. However, it has become much faster than it was a year ago, as reported by State Revenue Service.

Specialists to search for solutions to topical environmental problems in Ventspils

On Friday, 20 July, a meeting was held between Ventspils Commercial Port representatives and specialists from State Environment Service.

Children with functional disorders to receive services financed by EU funds

Child invalids will have access to social services intended to improve their social skills and mobility. More than EUR 4.2 million has been allocated for this goal from the European Social Fund, as confirmed by Latvia’s Central Financing and Contracting Agency.

Producer price level in industry up 4.3% in Latvia

Compared to June 2017, the average level of producer prices in Latvian industry increased by 4.3 % in June 2018. Prices of products sold on the domestic market rose by 4.8 % and those of exported products by 3.7 %.

Total tax debts in Latvia in July – 1.212 billion euros

At the beginning of July total tax debts in Latvia, including outstanding debts, halted debts and debts applied with repayment term extensions, accounted for EUR 1.212 billion, which is 0.8% less than a month prior, according to data from the State Revenue Service.

Survey: every third Latvian resident has received illegal loan offers

Nearly every third resident in Latvia or 31% of respondents admit having received offers to use illegal loan services, as concluded in a survey performed by Latvian Alternative Financial Services Association and SKDS.

Libya opposed to EU's idea to establish migrant centres in North Africa

Libya is against the solution of the European Union to set up migrant centres in the North African country as a means to keep migrants from arriving in the bloc and Libya would not be convinced with financial support, its Prime Minister Fayez al-Sarraj has noted.

Arrest warrant on Catalan ex-President cancelled by Spain

The Supreme Court of Spain cancelled a European arrest warrant for former Catalan regional leader Carles Puigdemont, as Germany refused to extradite him to face accusations of rebellion for declaring the independence of Spain's region, Catalonia in 2017.

Latvian government plans to allow handing expired food to charity

Latvia’s Agriculture Ministry has prepared amendments to the Law on the Supervision of the Handling of Food that provide permission to hand over certain types of food products to charity after the end of their expiry date.

Estonian industrial producer prices up 2.9% since June 2017

Estonian industrial producer price index has risen by 2.9% between June 2017 and the first summer month this year, resulting in an increase of export prices as well, Estonian statisticians have estimated.

Putin urges NATO to quit «irresponsibly» developing ties with Ukraine, Georgia

Russia's President Vladimir Putin cautioned NATO against developing deeper relations with Ukraine and Georgia, evaluating such a policy was irresponsible and would have consequences for the military alliance.

Latvian parliament not in a hurry to support president Vejonis for a second term

Political parties represented in the Saeima are not eager to support President Raimonds Vējonis for his remainder for a second term.

Weather in Latvia will remain warm and even hot at times

Weather in Latvia in the nearest couple of days will be dictated by a cyclone. Because of that the sky will be partially covered by clouds; thunderstorms are also expected, as reported by State Environment, Geology and Meteorology Centre.

Hungary sued in EU Court for criminalising help to illegal immigrants

The European Union's executive body has stated that a law in Hungary that criminalises support for illegal immigrants is in breach with EU law and Hungary has now been referred to the European Court of Justice for the alleged non-compliance.

Estonians buy alcohol in Latvia; country loses EUR 20 million in six months

Latvian stores located close to the Latvian-Estonian border have sold 1.6 million litres of strong alcoholic drinks in the first half year of 2019. This means Estonia has lost more than EUR 20 million in taxes, according to data from Association of Estonian Alcohol Producers and Importers.

Lithuania’s election watchdog slams ruling LFGU over popular TV series

Political messages can be channeled in various ways and the ruling now Lithuanian party, LFGU has chosen a very delicate way of the communications – through a TV series featuring the beauty and the ambiance of Naisiai, a picturesque settlement in Siauliai district.

Association: around 3,3000 people know of their HIV infection but receive no treatment

HIV remains a serious problem in Latvia – around 3,300 people are aware of their status but receive no treatment and continue spreading the infection. Because of that, it is necessary to act quickly for Latvia to lose its status as HIV kingdom and limit the spread of the infection, says Baltic HIV Association, informing decision-makers and responsible officials in institutions and hospitals about the HIV/AIDS situation.

Driver shortage may force reduction of international road haulage volumes

Latvia’s road haulage companies have started experiencing shortage of drivers. On top of that, if employment conditions for residents of non-EU member states do not change, it may be necessary to reduce the volume of road haulage volumes, says Latvijas auto president Valdis Trēziņš.

Lattelecom’s turnover up 9% in first half-year of 2018

Lattelecom Group’s turnover reached EUR 98.7 million in the first half-year of 2018, growing by 9% in comparison with the same period of 2017, according to unaudited financial results.

1,140 fewer births registered in Latvia in 2017

Since 2016 the number of births in Latvia is declining again. Compared to 2016, a total of 1,140 births fewer were registered in 2017. Also, the provisional number of births registered over the first six months of 2018 (9,664 children) is by 664 children smaller than that registered over the respective period of 2017.

Citadele Bank decides to reform Lithuanian subsidiary as a branch office

Citadele Bank has decided to reform its Lithuanian subsidiary as a branch office, as confirmed in the statement the bank submitted to Nasdaq Riga.

Russian pension age hike discussed amid protest outside Duma

As the Russian paliament votes on the proposal to gradually increase he pension age to 65 for men and 63 for women, some 200 people were seen protesting against the reform in Moscow.

Corruption watchdog chief says bureau has done no illegal actions

After going through Corruption Prevention and Combating Bureau’s past investigative activities, the bureau’s chief – Jēkabs Straume – found it confusing that officers often took no appropriate actions after acquiring evidence or receiving indications regarding necessary steps.