Ratas: basic exemption reform has proven effective

Jüri Ratas. Photo: Tairo Lutter

Estonian Prime Minister Jüri Ratas said that the basic exemption reform is the most important and fundamental decision regarding tax policy, which according to current data has proven effective, as it has increased the income of the majority of people who receive remuneration.

The purpose of the basic exemption reform was to decrease income disparity, render the society more solidarity-based and lower the tax burden of people earning lower to medium income, Ratas was quoted by spokespeople for the government as saying. The majority of people support lowering the tax burden of those with lower income, a fact confirmed by a public opinion poll commissioned by the Tax and Customs Board in the fall, Ratas said.

The Government Office is to discuss on Thursday the preliminary results of the tax reform with officials from the Ministry of Finance and the Tax and Customs Board. Calculations by the Ministry of Finance so far indicate that as a result of the reform, the income of 86 percent of people has either grown or remained unchanged – 63 percent started earning more and remuneration remained the same for 23 percent.

Data presented by the Tax and Customs Board on Wednesday indicates that of all people receiving remuneration, 415,000, or 42 percent, used their basic exemption in full. 519,000 people, or 52 percent, used it under and 62,000, or 6 percent, over the maximum limit. Those who used less of their basic income tax exemption than the maximum limit, will be repaid by the state in the estimated total amount of 14 million euros. Those who exceeded that limit will have to pay an additional combined amount of roughly 12 million euros to the state, the Tax and Customs Board said.

The final payable or refundable amounts will be determined following the submission of tax returns, the period for which is from Feb. 15 to April 1.

The basic exemption reform was part of the government coalition’s agreement and action program.