Ona Raudeliūnienė whisks 36 eggs into the batter, then drips it onto a spit as she turns a crank so the wood fire can slowly bake a cake that grows branches during the five to six-hour process.
She repeats the routine on many of her Saturday afternoons, because the work is worth it.
It is worth providing Lithuanian families with the traditional šakotis cake at the center of important celebrations such as weddings, Easter, and Christmas. It is worth supplementing her librarian’s income by as much as 40%.
Today, about 100,000 Lithuanians such as Ona take advantage of the opportunity to legally supplement their income through a simplified business license. The license removes administrative hurdles so micro-entrepreneurs across the country can capitalize on their talents.
Ona’s weekday is spent among the library books in Zūbiškės, a small rural town in central Lithuania. Very different talents are needed on those Saturdays in her backyard when she bakes šakotis, which means “tree with branches.”
“If you bake traditional hand-made šakotis, it requires patience, accuracy, good mood, and a smile,” Ona said.
The same could be said for entrepreneurs dealing with most governments’ business regulations. Yet, Lithuania simplified things for small entrepreneurs such as Ona.
The Lithuanian business license is similar to a lump sum tax and is applied to a particular business activity. Ona paid €210 in 2019 for her license to sell šakotis.
“You just have this small amount of money paid to the government and you have permission to start—and to see how it goes,” said Edita Maslauskaitė, vice president of the Lithuanian Free Market Institute, a non-profit based in Vilnius. Her organization argues that the simplified license expands opportunity for Lithuanians and has adamantly opposed its partial rollback.
“These business licenses are a really good opportunity for people to get out of poverty with dignity,” Maslauskaitė said.
Lithuania’s simple business licenses let people with full- or part-time jobs pursue business ideas, provide goods and services, and supplement their income without going through layers of administration and rules that kill free enterprise in many countries. The simple business licenses work as a gateway from the informal economy to the formal economy, and once out of the shadows the entrepreneurs can thrive.
Speaking out for opportunity
Not all Lithuanians are fans of the simplified licenses. Some in government and big business have repeatedly tried to eliminate them.
They have tried to limit which professions are covered and to abolish the program entirely. Licenses for business owners in child care, automotive repair, and construction services are no longer available. Fees for others have been raised—locking out many entrepreneurial Lithuanians from the opportunity to take small risks to test their business ideas.
Without the option of a simple license, micro-entrepreneurs such as Ona would have to register as a full-fledged company. That would mean she’d face all the same compliance costs and administration as a commercial bakery. Alternately, she might be pushed to produce outside the formal economy.
That sort of barrier would stop many Lithuanians from taking a legitimate part in the economy. They couldn’t afford it.
“People like Ona often say that it would be too complicated to run a business and carry this heavy tax burden that otherwise falls on business companies,” said Aneta Vainė, vice president of the institute.
The informal economy accounts for an estimated 20% of Lithuania’s gross domestic product. Simplified licenses keep a substantial portion of Lithuanians on the right side of the law and supporting their government.
“If these people will be open, creative and hardworking, it will make a prosperous Lithuania,” Ona said.
The licenses give creative and business-minded individuals the opportunity to participate in the economy with integrity and “take the first modest steps in doing business,” Vainė said. But they remain under threat.
Lithuanian entrepreneurs such as Ona should have their hard work and talents encouraged. Their path toward prosperity with respectability should not be blocked by the ongoing attempts to dismantle simple licensing.
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