2024-08-03 14:56:43
The partners emphasize that they do not question the needs of defense, but they assure that the proposed tax would not increase the collection of the budget, but would reduce the incentives of residents and businesses to take insurance.
The Ministry of Finance offers 10 percent. charge all insurance premiums except life insurance. This means that the changes would affect housing, comprehensive car insurance and additional health insurance. The contribution would be paid from 2025. of July, and the collected funds are used to finance national defense.
Representatives of the insurance sector, business, consumers and other interested groups were invited to submit written comments on the security deposit project, followed by meetings of partners and the ministry.
However, the president of the Association of Lithuanian Insurance Brokers Companies (LDBĮA), Šarūnas Frolenko, assures that the partners missed quality discussions at the meetings. According to the insurer’s representative, the opinions of the interested groups were heard formally, and the discussions of the proposed law were organized by the ministry “to put a tick”.
“Those discussions were tragically of poor quality. “The ministry did not present, did not provide any summarization of what comments it received, what comments are repeated, where is the concentration of all those comments, what market participants perceive, what threats they emphasize the most,” Š. Frolenko told the “Elta” news agency.
“The Ministry listened, allowed all the associations, business representatives, consumer organizations to speak, and after a few weeks presented essentially the same project as presented in the concept with, one might say, a few small corrections. First of all, the unwillingness and inability of the ministry to develop a constructive dialogue and create high-quality legislation based on facts, arguments, and figures is surprising,” said the representative of the insurers.
Rytis Jokubauskas, vice-president of the Consumer Alliance, also misses the discussions – according to him, the ministry chose an inappropriate meeting format to discuss the design of the tax under discussion.
“The ministry says – we want to listen to your proposals. But it turned out that the most everyone could do was repeat their positions, which they had already written down. Should we assume that there was a discussion because it was a reiteration of positions? I don’t know. So what we really miss and what we would really like is feedback from the ministry to tell us why one or the other proposals are appropriate or inappropriate”, the representative of the organization protecting the interests of consumers explained to Eltai.
As Finance Minister Gintarė Skaistė told reporters on Wednesday, July 31, although the Security Contribution project currently being negotiated is open to proposals, discussions should not undermine the main goal of the law – to maintain a sustainable 3 percent. gross domestic product (GDP) national defense financing every year.
Representatives of both insurers and consumers assure that they do not question the need and necessity to ensure sufficient collection of funds for defense, but add that the proposed tax design will not necessarily help to increase the state budget.
“With this project, not necessarily richer, but more conscious members of society will pay for defense.” A business that is forced to insure, because in some cases there is an obligation to do so, will pay. In other cases, residents will pay who are aware and insure their property in order to protect it and not have to ask for help from the state or municipality in case of disasters”, explained Š. Frolenko.
“The framework set by the ministry is not very encouraging. The ministry said that we can discuss anything that does not negate the general principle that defense tax should be collected. But does this mean that this fee for insurance contracts will really be a question of what and how much?”, agreed R. Jokubauskas, emphasizing that it is necessary to see the “bigger picture” than just the collection of the defense fee.
According to the president of the Association of Insurance Brokers, the main criticism of the current Security Contribution project is the negative impact of such changes on the market, when neither businesses nor residents who take care of their property will want to purchase more expensive insurance.
“The ban affects both natural persons and legal entities as well as specific sectors. The same farmers – we constantly have situations where we see that crops or other types of insurance are underutilized, because it is already expensive, and when natural disasters occur, such businessmen look to the state and ask for help,” the head of the insurance company association emphasized .
According to R. Jokubauskas, the application of the tax to insurance contracts will reduce consumers’ willingness to insure, and the state will have to provide financial assistance to uninsured residents and those affected by natural disasters and other disasters.
“The uninsured are being bailed out with all the taxpayers’ money.” If we collect that defense tax in one place, but the state expenses will increase according to all kinds of disasters – people are pulled out of those disasters, they are rescued, because people simply won’t get insurance anymore, it will simply be too expensive for them – we would think that this is a short-sighted solution,” said R. .Jokubauskas.
He also emphasized that the insurance tax would increase the burden on vulnerable sections of society – for example, families with small children who have a real estate loan.
“Having a home with a loan does not automatically allow any lender to not take out insurance.” Those persons are practically the main ones who pay the bank solidarity tax through the banks. It is from them that money is taken, and now they will also have to pay insurance contract tax on top of that,” said R. Jokubauskas.
As a result, according to him, the Consumer Alliance would tend to support the extension of the banks’ solidarity contribution, but at the same time calls for the search for “more solidary” alternatives to financing defense than insurance taxation.
“We would consider that such application of the tax is inadequate. There is really no solidarity here and therefore we would think that other means of collecting the defense tax should be looked at. We would say that it would be possible to find more effective and less painful ways of collecting the defense tax for the residents”, assured R. Jokubauskas.
“We understand that there are not only logic or economics here, but also political arguments, which the politicians are already making according to themselves,” he added.
As the Ministry of Finance plans to submit the final draft of the Security Contribution Law to the Government and then to the Seimas this fall, both the Association of Insurance Companies and the Consumer Alliance assure that they will participate in further meetings if they are organized before the upcoming parliamentary session. True, the partners emphasize “expecting quality”.
“We hope that the Ministry of Finance will be able to provide a reasoned, coherent and professional response to counter-argument what they have received from interest groups as arguments against this proposal. Because saying – we received your opinion, but it doesn’t seem important to us – is not the right way for a democratic society,” said Š. Frolenko.
The Security contribution proposed by the Ministry of Finance would be paid by insurance companies operating in Lithuania, insurance companies of other countries of the European Economic Area and branches of insurance companies of third countries providing service in the country.
According to the Ministry of Finance, there are currently no monetary obligations in Lithuania that are paid from insurance premiums.
According to the ministry, a similar tax is applied to insurance contracts in 18 EU countries, including Germany, the Netherlands, Spain, and France.
According to the information provided on the institution’s website, the amount of this fee varies from 1 percent in different member states. up to 24 percent
During the spring session of the Seimas, when considering sources of additional defense funds, among them was the introduction of insurance contracts for part of the tax. However, this proposal was removed from the final draft of the State Defense Fund and its sources of funds.
According to the calculations of the Ministry of Finance, the Security contribution already in 2025 would generate 50 million euros, and from 2026 – 100 million euros.
2024-08-03 14:56:43