Some 200 representatives of the hospitality sector waged a protest outside of the Lithuanian government’s offices in central Vilnius on Thursday to object to a value added tax increase that took effect at the beginning of this year.
As funereal music sounded, protesters treated passers-by to pumpkin soup and warm drinks. People were invited to a symbolic funeral reception. Tables were covered with black tablecloths, and there were baskets of funeral flowers with black ribbons. The flags of Lithuania, Latvia and Estonia were nearby to represent solidarity among all three Baltic States in this matter.
“Restaurants have been closing one after another,” BNS was told by Evalda Siskauskiene, president of the Association of Hotels and Restaurants in Lithuania, which organised the protest. “We’ve had 50 insolvencies during the first half of the year, and many other bankruptcies have been registered. This is just the beginning. The summer season is ending, the fall and winter are coming. Consumption will not increase, but wages will rise. Businesses are already finding that they cannot handle such a situation.”
Protesters carried signs demanding a 9% VAT rate on hospitality services.
“This is our plea to the new government, because the outgoing one ignored us,” Siskauskiene said. “Let’s bring back the 9% VAT rate, as is the case throughout Europe. The European VAT average in the hospitality sector is 9%.”
“The profitability of restaurants is now at 0.17%, according to the latest statistics,” she added. “They can hardly break even, and once they pay their taxes, hardly anything is left over.”
Gediminas runs a small catering business and says that if taxes are not reduced, he might have to shut it down.
“It’s a very small business,” he told BNS. “I know that taxes are affecting everyone and, of course, earnings are decreasing. We barely break even.”
Lithuania’s State Data Agency has reported that during the first eight months of this year, restaurants, cafés and catering companies in Lithuania had revenues of EUR 1.056 billion, excluding VAT. This was a decline of 7.3% on the year.
The standard 21% VAT rate was reintroduced in the hospital sector in January. The lowered 9% rate dated back to July 2021, when it was introduced to help the sector deal with the coronavirus epidemic.
Source: BNS
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