Selected Issues Papers

Lithuania faces immediate fiscal challenges from increased defense needs adding to the existing long-term spending pressures. Tackling these requires a multifaceted strategy, including revenue mobilization to ensure fiscal sustainability. This note examines tax policy options, assessing potential changes and their effects. It benchmarks Lithuania’s tax system with Baltic and European peers and analyzes revenue mobilization scenarios. Findings suggest that improving VAT efficiency, and adjusting personal income and property taxes, could boost revenues while enhancing progressivity.