A Personalized Tax Calculator Shows How Much Lithuanians Pay in Taxes

Every one of us pays taxes daily and yet only a few could tell how much exactly they pay in taxes per month or per year. The Lithuanian Free Market Institute (LFMI) launched a new tax calculator “Moku mokesčius” (“I Pay the Taxes”), which not only allows Lithuanians to see how much they pay in taxes but also shows how their money is then spent. Access the tax-calculator at www.mokumokescius.lt

 A personalized tax calculator is offering taxpayers a story-telling type of journey through a personalized tax and government expenditure universe. It allows individual taxpayers to navigate from their individual net wage income through personal monthly expenditures on different categories of goods or services and taxes they pay. Finally, the taxpayers get their individual bill for the taxes paid showing where the government spends the money, and travel through the government expenditure universe.

LFMI received positive feedback on the application not only from individual users and media representatives, but also from the Ministry of Finance of the Republic of Lithuania. The launch of the calculator also resulted in impressive outreach numbers.

With the “Moku mokesčius” (“I Pay the Taxes”) initiative, we want to familiarize the Lithuanian taxpayers with how much they pay in taxes and allow them to see for what the government uses their money. Even though we all are taxpayers, we seldom pay them directly and rarely know, how much we actually pay. Our salaries are given to us with all the taxes already paid by our employers, we see the goods in stores with the value-added tax (VAT) already calculated into the final price, we purchase gas with both VAT and excise tax already added. Our tax-calculator will show all the taxes paid clearly and simply. We predict the results to be quite surprising to many”, explains Kaetana Leontjeva, senior policy analyst at LFMI and co-author of the application.

For example, a person earning the minimum monthly wage pays 5600 Litas in taxes each year. The employee and employer “Sodra” contributions (state social insurance) comprise 3718 Litas of all taxes paid, compulsory health insurance contributions – 1080 Litas, income tax – 774 Litas, contributions to the Guarantee fund – 24 Litas.

Average taxpayer never sees all of the taxes he or she pays, because the money never even enters his or her account – it is the employer who pays the taxes. It is also important to note, that some of the taxes are referred to as ‘employer taxes’, even though economically speaking, the employee is the one paying them. Analogically, when we are shopping, we do not even realize the amount we pay in taxes as they are calculated into the final price of a good. When we are complaining about high prices, we should really be angry about excessive consumer taxes”, claims Ms. Leontjeva.

According to calculations, if one’s expenditure for the basic goods and services accounts to 1700 Litas per month, one pays 3540 Litas in VAT per year. For 300 Litas spent on gas each month, one pays 1800 Litas in excise taxes per year alone.

Not only the amount we pay in taxes is important – it is crucial to know how the government spends our money. The calculator also shows how much of what an individual paid went to state pensions, how much – to healthcare, to education, to the police, to the national defense, etc.”, elaborates Ms. Leontjeva.

LFMI carried out a series of activities to ensure a wide dissemination of the application, resulting in impressive outreach numbers. Over the first week of the launch of the website on July 14th until July 22th the tax calculator application generated 25,600 sessions.

The successful press conference and dissemination of the press release generated an outstanding number of media hits on the day of the launch of the application. The news about the new calculator were reported on the main news portals, radio channels, TV news and talk programmes, dailies. The media coverage secured an audience of 700,000 people alone on the launch day of the application.

Furthermore, LFMI secured informational partnership of the leading online news portal Delfi.lt, which has 1 million unique users and the largest outreach in Lithuania. Delfi.lt not only posted the tax calculator, but from July 17th Delfi.lt began posting banners advertising the application. LFMI senior policy analyst Kaetana Leontjeva authored a number of articles, which appeared on our media partner Delfi.lt news website as well as in regional media.

An informational letter about the application was sent to Lithuanian political parties, members of parliament, ministries, heads of municipal administrations, business associations, and LFMI supporters. LFMI also published a factbook on taxes and government expenditures. LFMI is set to disseminate the booklet to its target audiences through companies, libraries, LFMI events, meetings with local communities, etc.

On July 22th LFMI started an outdoor campaign promoting the calculator, which will generate additional users of the calculator. The outdoor advertisements reach citizens of 7 largest cities.

LFMI, by introducing the educational initiative “Moku mokesčius” “I Pay the Taxes”, aims to conveniently and clearly inform the Lithuanian citizens about how much they pay in taxes, and how their money is used. The tax calculator not only enables a quick and easy access to information on a personal tax burden, but also empowers citizens to consider what burden specific government decisions inflict. The application has also equipped politicians and decision makers with an effective tool to measure and analyse the costs and effects of public spending and provided a convenient tool to advocate a more responsible government.