For business, Lithuanian unnecessary armament is disastrous. For everyone except those who assemble drones from Chinese parts. Assemble until the Chinese come to their senses not to sell war supplies to Chinese enemies

 "Recently, I met with Artos Aass, an old partner of the Confederation of Lithuanian Industrialists, the general director of the Confederation of Estonian Employers (Eesti Tooandjate Keskliit). We discussed a rather painful topic: who could have thought that the time would come when we would learn from Estonian politicians what should not be done.

 

 Mr. Aas recently described the Estonian government's treatment of business with a very apt analogy: the current situation is reminiscent of medieval torture, where the government says you will still have one limb amputated, but you can still decide which one.

 

 And how did it all start? According to A. Aas, the Estonian government is now forced to constantly raise taxes because the country has been living above its means for several years. So now, not only are taxes being raised, but there is also a constant change of opinion on how else business can be taxed.

 

 As A. Aas tells us, Estonia's expenses have been growing faster than state income for many years. Public sector salaries and bureaucracy grew very rapidly. And it should not be surprising that there is now such a big hole in the state budget that, without raising taxes, the deficit would reach 5%.

 

 And at the same time, like Lithuania, Estonia faces the ill conceived "need" to increase defense spending.

 

 The Defense Financing Plan of the Estonian ruling coalition signed in July (Lithuania also adopted it) provides that from 2025 July 2 percent points, up to 24%, VAT will be raised, and from 2026 2 percent points, up to 24%, personal income tax. At the same time, there was a provision that due to the need to finance defense from 2026 at least until 2028 at the end of the year, the state will collect a 2% tax on corporate profits.

 

 Estonia has not had such a profit tax until now, because companies operating there are taxed at the time of profit distribution, i.e. when it leaves the company, for example by paying a dividend.

 

 Business representatives together with some Estonian politicians tried to look for alternatives, such options include an additional salary tax at the same 2% rate or a corporate property tax. Under this proposal, companies would pay this tax or levy when submitting their annual business report, and its amount would be calculated based on the size of the legal entity's balance sheet.

 

 VŽ: On Tuesday, the Estonian government stuck to the idea of ​​introducing a corporate tax and abandoned plans to tax corporate assets or payroll.

 

 Representatives of the Confederation of Estonian Employers say they are very disappointed because the introduction of new taxes has a very negative effect on economic growth. Estonia's economy has been in decline for nine consecutive quarters.

 

 The lesson is painful but clear: governments cannot be allowed to spend beyond their means, otherwise the process spirals out of control, leaving only bad or very bad choices.

 

 Observing the rain of Lithuanian election promises, one wants to hope that he will not get Lithuania into a similar situation.

 

 On Tuesday, the Bank of Lithuania presented a rather optimistic forecast: that this year the gross domestic product (GDP) will grow by 2.2%, 0.3%. point more than was forecast in June.

 

 However, we still live in conditions of high energy costs, expensive capital and risky wages. The main export partners are not recovering either, investments are shrinking. This year, the decrease of investments in the country is predicted to be as much as 3.6%.

 

 I strongly recommend that our politicians learn from other people's mistakes, as smart people do, and not get stuck in their own.

 

 Because Lithuanian business does not want to consider which limb they should amputate: at this economic stage, we not only need them all, but a few extra ones would be useful to achieve the required speed.

 

 The author of the comment is Vidmantas Janulevičius, president of the Confederation of Lithuanian Industrialists (LPK)."