Sigitas Leonavičius. Real estate tax – another blow to housing affordability

 

“Real estate tax (RT) is presented as a tool of social justice. However, if we look deeper, we see something completely different – ​​another taxation on those who dared to own property. In other words – you paid for housing, now pay for having it. Every year.

Until recently, political parties promised to solve the problem of housing affordability. Today, instead of solutions, there is a static tax that has no connection with a person’s income, opportunities or demographic situation. A tax that will most affect not speculators, but the middle class, young families and pensioners who have acquired their wealth honestly, over many decades.

Affordability? This is now a luxury concept

For now, there is reassurance – property worth up to 50 thousand euros will not be taxed. But the reality is that even a small apartment in Vilnius or Kaunas has long exceeded this threshold. And the Center of Registers, when recalculating tax values, are already preparing new “surprises”. If you don’t have a home – bad. If you do – even worse.

When a person takes out a mortgage and risks a twenty-year commitment, they should at least know what awaits them. Unfortunately, today we live in a regime of economic surprises: interest rate hikes, energy price hikes, inflation, and now – real estate tax.

Who will talk about demography when all that remains is survival planning?

Today, families are thinking not about the number of children, but about taxation of square meters. And this is not rhetoric. Birth rates in Lithuania are tragically falling, but instead of incentives for young families, we are offering them another fixed line of expenses. Has anyone really analyzed how this tax will affect families’ decisions regarding their place of residence, child planning, or even emigration?

The decision to tax the first home – even with benefits – directly contradicts the goals of family policy. Because a family without a home is a family without the opportunity to grow. When owning your own home becomes not an achievement, but a tax risk, it becomes cynical to talk about a long-term state strategy.

And what awaits those who do not yet have a home?

Those who rent today could at least somewhat hope that the “tax reform” will not significantly harm them. But the real estate tax – as always – is not inert. If additional costs arise for the homeowner, they are inevitably transferred to the rental price. In other words, everyone will pay – even those who have nothing.

The rental market, which is already balancing on the edge of affordability in Vilnius and Kaunas, will be one of the most likely to feel this change. And here a rhetorical question arises: where should people who cannot purchase a home, but may soon no longer be able to live in it, go?

Does this mean that the real reforms to “regulate the rental market”, which were talked about before the elections, are limited to making rent even less affordable?

Tax logic that has no logic

Sounds great – 0.1 percent, 0.2 percent, 1 percent. of the tax value. But when the Center of Registers decides that your apartment is “worth more in the market”, do you become “more capable” regardless of income, situation or life reality? And when at the same time there are plans to increase personal income tax (PIT), corporate tax, and reduce benefits – the question arises very simply: how much more do businesses and people have to endure?

All this is happening in a country where the Constitution guarantees that property is inviolable. Only in practice it increasingly seems that this inviolability is valid only until the state needs additional income. Then property becomes not a human right, but a financial resource that can be regulated, assessed, taxed and reinterpreted according to budget needs.

So are we still creating a welfare state, or just an illusion of welfare?

Owning a home in Lithuania is gradually becoming not a guarantee of dignity, but a financial burden. Rents will rise, purchasing opportunities will decrease, and no one will talk about stability anymore.

Therefore, the question today is very clear: is this tax really what Lithuania needs today? Or maybe it's time to stop, assess the real social situation, demographic processes and people's capacity?”