On May 11, 2021, Lithuania celebrates The Day of Respect for the Taxpayers. On this occasion, the Lithuanian Free Market Institute (LFMI) invited everyone to thank all taxpayers for their contribution to the welfare of the country.
“On the Day of Respect for the Taxpayers, we thank people for their talents, that improve our welfare, for the days and years that they’ve sacrificed for us, for the burden that every taxpayer bears every day,” – said the LFMI President Elena Leontjeva. – “We seek for their contribution to be appreciated, because thanks to the taxpayers, Lithuania has a budget, military, schools and hospitals, airports and nature reserves.”
“It is only possible to distribute what was created, so we must respect the taxpayers and allow them to create,” – emphasized E. Leontjeva. – “Only thanks to the taxpayers, we have a public sector, whose purpose is to serve our citizens by building prosperity based on mutual respect. We need to remember that gratefully every day.”
The Recent Changes Are Not Enough
Among the rights of the taxpayers are the rights to an efficient tax system, to well-prepared tax laws, to the stability of the tax system, to efficient use of taxes, to plan taxes, to the predictability of the actions of the tax administrator, to be considered an honest taxpayer, and so on.
The possibilities for the taxpayers to use those rights, established in the Lithuanian legislation, are often prevented due to the lack of clarity. There would be more transparency and clarity, if the taxpayers knew exactly how the tax administrator would treat one or another provision of the law if there were fewer legal conflicts and opacity.
“In order to restore the respect for the taxpayers, the entire space of by-law tax interpretations must be reorganized. Solutions that would minimize the discretion of the tax administrator to interpret the law, and change one’s own opinion over time, should be found” – assured E. Leontjeva.
The attitude of the tax administrator towards the population is changing: business models of the private sector are being taken over, efforts are being made to provide information as soon as possible, investments are being made in new ways of consulting, and the creation and development of the infrastructure of electronic services.
However, many problems still arise when it comes to disputes related to taxes.
In the global practice of taxes, tax administrations, while assessing a situation, maintain that a non-compliance with the formal requirements should not create additional tax obligations for the taxpayer or prevent the use of certain tax benefits. A slightly different practice is developing in Lithuania, which is unfavorable for the taxpayers.
Usually, the principle of the supremacy of content over form (In tax legal relations, the content of activities of the participants in these relations takes precedence over its formal expression) is applied only to one side – in favor of the state budget.
This discourages the taxpayers not only from benefiting from tax incentives, but also from engaging in certain economic activities.
High-Tension Areas Should Be Removed as Soon as Possible
We show respect to the taxpayers, when we spend their earned money responsibly, when, for the euros they pay, they are met by public authorities with respect and quality service, on a daily basis.
“It is important for the taxpayer that he receives the best possible service from the public sector for the taxes that he pays,” – stated Leontjeva.
“The authors of tax laws should understand that the taxpayer cares not only about the rate, but also about the whole set of tax rules. The same rate from an expanded base will come with a completely different burden, and the base is dependent on clarity.
If only later, during the inspection, it becomes clear that the tax rules had to be treated differently, the taxpayer faces not only an increased burden, but also fines and periodic penalties. There are many high-tension areas in the tax system, which should be removed as soon as possible if we want to restore the trust and mutual respect between the taxpayers and the government,” – said the President of the LFMI.