The policy of applying indirect taxes, like value added tax and excise

The answer is D.

Eliminate A; the verb "were" in the adjective clause "that were enforced" does not agree with the singular "policy," and "tightened...and not to loosen it" is not a parallel comparison (great job Vivek!) between the two actions that could be applied to the "tax rules and tariffs."

The "compared to/with" distinction, is quite subtle; "compared with" generally highlights differences, whereas "compared to" points out similarities.

There's a lot underlined here, and a great strategy when there's so much going on is to focus on what's tested. We know that there is some sort of subject/verb agreement issue to watch out for and that there is a comparison at the end of the underlined portion. It seems as though many of you picked right up on the S-V agreement error and eliminated choices C and E.

Many pick up on the pronoun errors and awkward constructions in these options.
Here comes the B versus D battle that's going on here. The other thing to notice about this sentence, as stated before, is this "rather than." As SOON as you see "than," look for a correctly formed, parallel, logical comparison.

Let's check out the different things compared in B and D:

"tax rules and tarrifs that..."

B) needed to be TIGHTENED...rather than LOOSENING THEM
D) needed to be TIGHTENED...rather than LOOSENED

Choice D is wordy, but correct. Choice D makes the parallel comparison here between the two actions applied to the "tax rules and tariffs." Additionally, the pronoun "them" is totally unnecessary and creates an awkward, redundant construction. Though some pronoun use on the GMAT may be flexible, if your really stuck between two options and one contains an unnecessary pronoun, choose the other option. We KNOW that the adjective clause describes the tax rules and tariffs. The comparison is already unparallel, but using the unnecessary "them" also makes it redundant.

For example:
"The dog that I am petting and walking it belongs to my brother."

Look how awkward that "it" is!

The "when compared with" in B is much less preferable to "compared with" alone. Why use "when" if you don't need it? "When" specifically refers to time, and this sentence is not about a specific time at which the two policies were compared; in 2000, compared with another policy, the policy in Lithuania was less strict. Try to reserve "when" to describe a time period.
Some get thrown off by the use of "that" in choice D. But remember; as long as "that" replaces the other singular item in a comparison, it's totally fine. Here, "Compared with THE POLICY enforced by...THE POLICY enforced in Lithuania..."

The comparison is parallel and logical.

Some get stuck on the use of "like" here. "Like" can be used to compare two nouns, and it can also mean "such as." Though "like" is more casual than "such as," "like" is a preposition that can be used to introduce noun examples. When the GMAT wants to test the misuse of "like," it will use "like" to compare two things
that are not nouns. Whereas a parallelism error is enough to eliminate an option, a casual, but not incorrect, use of "like" is not an error.

The answer is D. Remember to focus on what's important, including comparison terms and S-V agreement. As soon as you see a "than" or "as...as" construction, eliminate comparisons that are not parallel or logical. Watch out for unnecessary and awkward pronouns.
Remember: "that" can be used to replace a singular item in a comparison.

Use the differences between options to help, and if a construction seems awkward but you can't quite figure out why, hold onto it and use the differences between this option and other options you're left with to eliminate ERRORS.