Coalition to drop two new taxes

Photo: Marko Saarm

Representatives of the Center Party, Social Democrat Party, and Pro Patria Res Publica Union (IRL) agreed on changes to the coalition’s tax package that will see the income tax pledge and package excise duty instruments dropped, while the sweetened beverages tax will be retained.

“It is our common goal to make Estonia’s business environment more competitive and support sustainable economic growth. We promised the coalition agreement would be a flexible document we would always be willing to update and improve,” heads of parties emphasized.

While the partners decided to drop the planned income tax deposit instrument, ways will be sought to limit profits being taken out of Estonia free of tax. The Riigikogu Finance Committee and the Ministry of Finance will prepare corresponding amendments to the income tax act by January 1, 2018.

The coalition also agreed not to lay down a package excise duty. The government promised to analyze best practices in package and waste management for a year before deciding on further steps.

The coalition also decided to broaden the possibilities of basic exemption for spouses by restoring married couples’ right of filing joint tax returns in recent volume (for up to €180 a month).

Prime Minister, Center Party Chairman Jüri Ratas said that negotiations were constructive and the sides worked together to look for the best solutions for Estonia. “I would like to thank and commend all government partners for maintaining strong team spirit. We decided together not to cut significant achievements in terms of the quality of life of people in Estonia, but to find cover for expenses elsewhere,” he said.

IRL Chairman Helir-Valdor Seeder originally sought changes to three bills that had passed their first readings, as well as restoration of joint declarations by spouses.

Dropping the two taxes and restoring joint tax returns will cost €200 million in four years, or €50 million annually.

Seeder initiated the discussion over changes to the tax package after being elected IRL chairman in the middle of May. Negotiations began the week before last.