When political parties force their way into government, they readily dish out promises that later on are ignored or abandoned. Lately this fate has befallen the Lithuanian Conservatives, whose policy has been implemented by a third consecutive administration. With each new cabinet, the amount of work that they promise to accomplish is shrinking. Not because it has been done, but because many election promises have been scrapped.

The government's pledge to reduce value added tax to 15 percent was the first to disappear from the work-plan. The motivation behind this move was that another election promise - the abolition of the corporate income tax - would be fulfilled in a much better way than originally planned. It was proclaimed that, instead of suspending the corporate income tax for a period of ten years, it would be eliminated once and for all.

That the plans to reduce value added tax were dropped is understandable. Politicians should have known better than to promise to cut the most effective taxes of all and to conserve the most defective. The promise to reduce value added tax was made without taking into account the logic of how the tax code should be rearranged. But over time the rational and imperative policy to scrap the corporate income tax evaporated too. The problems related to the calculation of taxable profits were conserved together with the plan to only reduce the tax rate. The new tax rate will be valid only in calculating profits earned in the year 2000, that is as of 2001.

During election campaigns, politicians promise that the country's gross domestic product will grow at an established rate and that people's income will increase to a level comparable to that in European countries. Such promises are incorrect and inexorably doomed to failure because it is not the government that creates GDP or earns bread for the people. Governments must not promise that which they cannot fulfil. Recognising these promises is is placed on the shoulders of the voters .

Compensation of depreciated savings is the latest example of election promises that the government has reneged on. The decision to repay lost deposits, a programme that would require about one million US dollars, had no economic rationale and was a populist move. But once started, the compensation programme had to be completed. The main reason why the programme was suspended was a shortage of money. But the year 1998 alone brought in 2.3 billion litas in privatisation proceeds! Where did this money go? The law requires that two thirds of income from privatisation must go towards repaying lost savings. If the two thirds had been used for that purpose, almost all of the depreciated savings would have been repaid. The fulfilment of this pledge got stuck in the reefs of inadequate implementation, showing complete disrespect for law and a total lack of responsibility.

All too often politicians are a bitter disappointment. Despite that, the people's trust in them remains large. Politicians readily and generously dole out promises, and the people believe in them every time. People plan and project their activities based on government plans. In Lithuania entrepreneurs have planned investments based on the proclaimed abolition of the corporate income tax. People waiting for savings compensation have planned their expenditures, both today's and tomorrow's. Today many people would behave differently if they had not based their decisions on the promises made by government officials.

Municipal elections are approaching in Lithuania. So are parliamentary elections. Are there any changes in store for us? The Lithuanian Free Market Institute is already working to help people fathom the various promises that will be made. We are working for politicians in order to help them figure out what promises should be made so that these promises may be realised and serve all people rather than simply narrow interest groups. LFMI is preparing a publication "Seimas 2000" that will represent a guide to a reform agenda as well as clear and consistent election programmes. It will feature brief analysis of topical policy issues in Lithuania and offer well-considered proposals for comprehensive changes and measures to solve immediate concerns. By doing this, we aim to prevent politicians from making unrealistic promises and to show concrete ways to implement necessary, viable reforms.