Editorial: taxing company cars – correct step taken incorrectly

Photo: Toomas Huik

When it comes to taxing cars, finance ministry is basically on the right track; even so, it is weird for them to drive the tax amendments through Riigikogu with no prior public debate. The more so that we are not talking about a tax hole that was discovered «yesterday» and needs to be closed up by tomorrow, so let’s run... No: all the issues and question marks have basically been known for quite a while.

It would be extreme naiveté indeed to think that high state officials and politicians are unaware of such a thing as inclusion of interest groups in preparation of bills. Thus, we will now be plagued by the ugly feeling that taxing company cars has deliberately been attempted in violation of good practice. Already, some have suggested that the juicy car-business-bone has been cast before people, by crafty politicians, in order to draw attention away from some other budget-related issues. This may be paranoid... maybe, just maybe, the doubters are overestimating the political technologists and the sharpness of their chess-player minds? 

Maybe, indeed, it just struck the finance ministry how to justly tax the cars registered as company vehicles. This, however, will not explain avoiding the interest groups, public discussion only becoming possible as both bill and amendments are already at Riigikogu.

The bill says the new rules are to enter into force as of July 1^st, next year. Sure, that leaves companies ample time to adjust. The issue not being government and/or Riigikogu having to dance to the pipes played by car sellers or entrepreneurs’ organisations – having heard them all, the finance ministry could still forward its own ideas and the parliament then decide that wider interests outweigh those of the interest groups. Here’s the rub: time is given to adjust, not to discuss. This is no way to write law, in Estonia. 

Basically, however, we agree: the line between business and private expenses must be drawn more definitely. It would not be just, would it, for top and middle managers or company owners have options to obtain quite a share of private consumption tax-free (fabricating driving journals, for instance), while young families, pensioners and other «ordinary folks» pay all taxes full blast.

Business and private costs have to be differentiated in a meaningful way – this being a goal not easy to achieve in real life with all of its details. However, try we must. The abundance of details being the very reason why it would be prudent to hold talks with interest groups.