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Lithuania's Bold Plan: Tax Breaks to Boost Birth Rates Amid Crisis

Lithuania is taking dramatic action to address its shrinking population. President Gitanas Nauseda has proposed sweeping tax breaks and social measures to boost the birth rate. Families with multiple children would pay no income tax for five years under the new plan. The country faces severe demographic pressure with fertility rates well below replacement levels.

Key Points: Lithuania Proposes Tax Breaks to Raise Fertility Rate to 1.5

  • Families with two or more children would pay zero income tax for five years
  • Employers hiring parents from large families receive tax incentives
  • Social insurance base would cover pregnancy and maternity leave costs
  • Rent-to-buy housing programs expanded for families with children
2 min read

Lithuania proposes tax breaks to raise fertility rate

President Nauseda proposes zero income tax for families with multiple children and employer incentives to combat Lithuania's demographic decline and low birth rates.

"The President emphasizes that it is very important to reduce the decline in the birth rate, or at least to stop it - Vaidas Augustinavicius"

Vilnius, Nov 25

Lithuanian President Gitanas Nauseda is proposing a package of tax breaks and social measures aimed at raising the country's birth rate to 1.5 children per woman, Lithuanian National Radio and Television (LRT) reported on Tuesday.

Vaidas Augustinavicius, Nauseda's Chief Advisor on economic and social policy, said the target is ambitious but necessary amid a sharp demographic downturn.

"The President emphasizes that it is very important to reduce the decline in the birth rate, or at least to stop it, as we have seen a huge drop over the last few years. And if possible, even to increase it," Augustinavicius said, Xinhua News Agency reported.

"We had a discussion with sociologists that if this indicator were to increase from 1.1-1.2 to 1.5, it could be a benchmark for what we should be aiming for. Of course, this is difficult to change."

Under the president's proposal, families with two or more children would pay zero income tax for five years following the birth of each additional child. Nauseda also suggests introducing income tax incentives for employers who hire parents from larger families.

Additional measures under consideration include establishing a social insurance base for young families to cover pregnancy and maternity leave, exploring the option of reimbursing part of tuition costs after the birth of a child, and granting families with children access to rent-to-buy housing through expanded municipal housing programs in regional areas.

Augustinavicius said recent trends suggest that young people in Lithuania are not rejecting parenthood altogether but are delaying family plans. "The president sees that the birth rate has been declining for several years, with a particularly sharp decline after 2022.

The International Monetary Fund reported in October that Lithuania faces mounting demographic pressure driven by low birthrates and years of negative migration. Between 1998 and 2019, the working-age population fell from 2.34 million to 1.81 million, though it edged up to 1.89 million in 2024.

The European Union's total fertility rate fell to 1.38 in 2023, down from 1.46 the previous year and far below the replacement level of 2.1. Malta had the bloc's lowest rate at 1.06, followed by Spain at 1.12. Lithuania's rate stood at 1.18

- IANS

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Reader Comments

R
Rohit P
Zero income tax for 5 years for families with 2+ children? That's quite generous! But I wonder if this will actually solve the deeper issues - young people delay family planning due to career pressures and lifestyle choices, not just financial concerns.
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Ananya R
As a working mother in Bangalore, I appreciate Lithuania's approach. The rent-to-buy housing scheme for families is brilliant! In Indian metros, housing costs are the biggest barrier for young couples wanting to start families. Our government should take note! 🏠
D
David E
Interesting to see European countries facing similar demographic challenges. The EU fertility rate of 1.38 is concerning for their long-term economic stability. While India has a higher birth rate currently, our urban areas are showing similar declining trends.
K
Karthik V
The proposal to reimburse tuition costs after childbirth is innovative! Education expenses are a major concern for Indian parents too. However, I hope Lithuania also focuses on improving childcare infrastructure and work-life balance, not just financial incentives.
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Shreya B
While I support measures to support families, I'm concerned about the environmental impact of pushing for higher birth rates. Maybe countries should focus on sustainable population policies rather than just increasing numbers? Just a thought 🤔

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