Sugar tax, car tax to be introduced in 2025

Lauri Läänemets and Kaja Kallas. Photo: Eero Vabamägi

According to the Estonian state budget agreed on on Tuesday, the planned car tax will be postponed by one year and will come into effect in 2025, as will the planned sugar tax.

The coalition will not be imposing a tax on banks. According to Prime Minister Kaja Kallas, she met with bank managers on Tuesday, who promised to contribute in solidarity, that is, to take out more dividends and pay more tax on it. Over the course of two years, this will bring in 120 million euros in tax revenue in addition to what has already been forecast.

"As a result, we are able to establish a tax break for banks for three years," Kallas said.

"We have reached an agreement regarding the big picture. The most important message is that next year there will be no new taxes in addition to those that were already passed in the Riigikogu in the spring," Kallas added.

According to her, specific figures will not be announced at this time, as the officials of the Ministry of Finance are calculating the numbers. The table will be ready in the next few days and then it will be presented to the public.

Over the next four years, the government plans to lay down a so-called solidarity tax of 1 percent of GDP, or 400 million euros, per year in its budget strategy. The government will discuss how to collect this tax in the coming months. According to Kallas, the solutions for this need to be worked out by July of next year, so there is time for discussions and consideration.

Of state employees, only teachers will see a salary hike in 2024. There will be no salary hikes for police officers and rescuers next year.

"One rescue brigade will have to be closed next year," Interior Minister Lauri Laanemets said.