EU – Baltic States, Financial Services, Funds, Lithuania

Vilnius city mayor applied to the Government which is planning the next year budgets of municipalities. He urged the Government to take into account the expert opinions on the causes of the current financial situation of the country's municipalities, writes LETA/ELTA.

Zuokas said that the Government had only been damaging the financial state of the city so far.

According to the head of the capital, the municipality debt had increased by more than LTL 500 million (EUR 144.8 million) over the last office term. Financial analysts claim that one of the main reasons why the city debt was increasing in 2007-2010, is the inadequate planning of Personal Income Tax (GPM) revenue done by the Government. As a result, the budget of the municipality did not receive about LTL 300 million (EUR 86.8 million).

Under the current law, 60% of GPM collected in Vilnius city is given to other municipalities, whereas only 40% of the collected the tax stays in the city budget. However, in almost all the other Lithuanian cities the whole amount of collected GPM tax remains.

Also a part of GPM collected in Vilnius is transferred to the other Lithuanian cities in which some Vilnius residents have declared their place of residence, while in fact they work and live in Vilnius.

Vilnius City Municipal Council in April appealed to court in order to protect the rights of Vilnius residents and get the refund of the revenue loss during the 2009-2011 which amounts to of LTL 939 million (EUR 272 million). Vilnius Council also asked to increase the part of the GPM tax that remains in Vilnius city budget from current 40% to 60%.