Sa, 2.12.2023

Estonian parlt passes tax law amendments

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Photo: Jaanus Lensment / Postimees

The Riigikogu on Monday passed amendments to the Social Tax Act, Income Tax Act and other laws according to which the excise duties on alcohol, tobacco and fuel will be raised faster than planned by the previous governments and the value added tax on accommodation services raised from 9 percent to 14 percent.

The bill tied by the government to a confidence vote was passed in the 101-seat chamber with votes 58 to 41 and no abstentions.

The government gave its nod to the package of tax bills according to which amendments to tax laws will be carried out pursuant to the coalition's program on May 21.

The bill replaces a 10 percent rise in the alcohol excise duty planned for 2016 with a 15-percent hike from Feb. 1, 2016. The tobacco excise duty will be raised by another 3 percent in 2016-2018 on top of the 5 percent planned earlier, but the 2016 rise will become effective on June 1 or six months later than originally planned. Both alcohol and tobacco excise duties are to rise 10 percent in 2019-2020. The excise duty on wine is to rise by 20 percent in 2019 as well as 2020.

Fuel excise duty is to be raised by 10 percent in each of the next three years. Diesel fuel excise duty is to rise 14 percent in 2016 and 10 percent in both 2017 and 2018.

The rise in the excise duty for light fuel oil will follow precisely the rise for diesel. From 2016 onwards, the excise duty levied on special use diesel will be 27 percent of the rate applied to diesel.

The excise duty rate for heavy fuel oil will be raised from 15.01 euros to 58 euros a ton and the rate applicable to shale oil from 15.01 euros to 57 euros a ton from 2016. The rate of the duty on solid fuels such as coal, brown coal, coke and oil shale used for heating will rise from 0.3 euros to 0.93 euros per gigajoule of the top calorific value of the respective fuel from 2016.

The higher excise duty rates are estimated to increase the inflow of money into the state coffers by 111 million euros next year.

Besides the amendments will raise the value added tax rate on accommodation services from 9 percent to 14 percent and cut the rate of social security contributions by 1 percentage point. In 2017 tax receipts are to decline by 33.8 million euros and in the two following years by 86 million and 91 million euros, respectively.

The tax-exempt monthly income will be raised to 205 euros by 2019 and income deductibles will be reduced from 1,920 to 1,200 euros.

The opposition used filibuster to delay the progress of the tax amendments in parliament last week but had to give up when the government tied the package to a confidence vote.