Lithuania’s defence budget could reach 3 percent of GDP as early as this year, says Foreign Minister Gabrielius Landsbergis, leader of the ruling conservative Homeland Union party.
“I wouldn’t be surprised if we reach 3 percent this year. There are such options,” the foreign minister told reporters.
“Additional funding for this year is under consideration,” he added.
Landsbergis’ comment came after the so-called Defence Fund package, which aims to boost Lithuania’s military spending in the coming years, was tabled in the parliament on Tuesday.
“The package under consideration, in its entirety, would put us significantly above 3 percent of GDP,” the foreign minister said.
“I think we are approaching 3.5 or 3.2 percent of GDP. That would place Lithuania among the top three NATO countries [in terms of military spending],” he said.
The proposed legislation seeks to raise additional funds for defence by increasing the corporate tax by one percentage point, to 16 percent, raising the reduced corporate tax rate for small businesses from 5 to 6 percent, introducing a so-called “defence component” of 6 cents (5-cent excise duty and 1-cent VAT) on automotive fuel, and further hiking excise duties on alcohol and tobacco.
The package also suggests lowering the annual income threshold, from 45,000 euros to 20,000 euros, for those working under a business license, which would result in higher taxes for some self-employed individuals.
Other proposals include abolishing special corporate tax regimes for the insurance and health sectors.
The package also calls for scrapping the limitation of car-related deductions linked to the environmental impact. The amendments provide for deducting from income 75,000 euros in expenses for the purchase and rental of passenger vehicles if their carbon dioxide (CO2) emissions are zero and 10,000 euros if their CO2 emissions exceed 200 grams per kilometre.
Landsbergis said the proposed measures would allow Lithuania to make significant purchases in the coming years.
In response to some MPs’ criticism of the government’s proposals, the minister said that the military would lose some planned acquisitions if parts of the package were voted down.
“While voting against certain parts, we have to understand that there’s a specific acquisition attached to a certain part,” the conservative leader said.
Politicians want to boost defence funding to speed up the establishment of a military division, to host a German brigade, which is expected to be stationed in the country by 2027, and to prepare for universal conscription.
