Among other things, the IMF delegation was interested in the development of Estonia’s tax system to assess how it could better support budget sustainability. Reforms to improve competitiveness were also discussed, including strengthening the investment environment, opportunities for using of artificial intelligence, and labour market policy. Special attention was given to energy policy and the impact of electricity price fluctuations on competitiveness.

Chair of the Finance Committee Annely Akkermann explained the situation regarding the sustainability of Estonia’s state budget.

“Due to the rapid growth in defence spending and changes in income tax, the general government deficit has risen to 4.5 percent, which will decrease gradually in the coming years and reach 2.8 percent of GDP by 2029. The goal for the coming years is to reduce the budget deficit,” Akkermann said. She pointed out that after the cancellation of a two-percentage-point income tax increase, Estonia’s tax burden fell from 36.6 percent to 35.2 percent. The national debt burden grew by EUR 1.7 billion, to 25.9 percent of GDP. The national debt burden will increase because of all the additional costs, and is predicted to reach 31.4 percent of GDP in 2029, and the interest costs will amount to 0.8 percent of the GDP, or EUR 417 million. High inflation has slowed down and currently stands at 4 percent.

According to Chairman of the Economic Affairs Committee Marek Reinaas, the meeting provided a useful comparative overview of the economic situation in neighbouring countries. He noted that the Estonian economy was on the rise, which was evidenced by 2.4 percent economic growth. “To support a technology-intensive growth cycle in Estonia’s economy, we are creating an attractive investment environment, a supply of clean energy, and diverse access to capital for businesses that meet the economy’s changing needs,” Reinaas explained. To resolve energy-related challenges and achieve more affordable electricity prices, it is necessary to invest in the construction of wind farms to ensure that 70 percent of the energy portfolio consists of non-dispatchable green energy.

Chair Annely Akkermann, Deputy Chair Andrei Korobeinik, and members Aivar Sõerd, Mart Võrklaev and Riina Sikkut from the Finance Committee, and Chairman Marek Reinaas and member Urve Tiidus from the Economic Affairs Committee participated in the meeting with the IMF delegation.

During its visit, the IMF delegation will get an overview of the current state and prospects of Estonia’s financial sector, as well as changes in anti-money laundering policy and practices. As in previous years, the focus is on the readiness of Estonia’s financial supervisory authorities to take additional steps to ensure financial stability if it should prove to be necessary.

The delegation of the International Monetary Fund (IMF), which is visiting Estonia until 9 June, will discuss Estonia’s economic situation and necessary economic policy measures with representatives of the public and private sectors. The visit takes place in the framework of the IMF’s annual economic policy consultations.

The IMF delegation will meet with members of the Government and the Riigikogu, as well as with leaders and analysts from Eesti Pank (Bank of Estonia), and representatives of ministries, local governments, government agencies, and the Financial Supervision Authority. They have also planned to have meetings with the representatives of commercial banks, professional organisations and private businesses.

Head of the IMF delegation Vincenzo Guzzo will present the conclusions of the visit at the press conference on Tuesday, 9 June at 11 a.m. The Minister of Finance and the Governor of the Bank of Estonia will also give comments at the press conference.

The IMF discusses important economic policy issues with all member states. The outcome of the consultation is a public report reflecting the IMF experts’ assessment of Estonia’s economic policy.

Photos (Erik Peinar, Chancellery of the Riigikogu)

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Link uudisele: The committees of the Riigikogu discussed Estonia’s economic situation and economic policy measures with IMF representatives

She highlighted the guiding principle of the Three Seas Initiative, which is to overcome the shortfall in infrastructure investment in our region and strengthen North-South connections in the transport, energy, and digital sectors.

“Discussions on budgets and connectivity are taking place in a complex security situation. Prosperity can only flourish where safety and stability prevail,” Akkermann underlined.

In her speech, Akkermann will emphasize the importance of resilience and military mobility, which enable the rapid movement of troops across borders during a crisis. Much of this is practical and for civilian use: rail and road transport capacity, bridge load standards, and interoperability. “Investing wisely in this improves everyday connectivity and reduces the costs of future emergencies,” she noted.

Akkermann said that Estonia welcomes the commitment in the Summit Declaration to strengthen the parliamentary dimension of the Three Seas Initiative in order to deepen cooperation with governments, experts, and business and investment communities.

Estonia’s main and continuing interest is to use the 3SI as a practical tool to reduce the infrastructure investment deficit in our region in cooperation with reliable partners, in order to boost the economy and support security, including military mobility. This cooperation also supports our interests in obtaining co-financing for infrastructure projects within the EU. For Estonia, participation in 3SI has been successful: we contributed 20 million euros to the 3SI Investment Fund (3SIIF) and have received 130 million euros in investments in return.

The priorities of Croatia, the holder of the presidency of 3SI this year, are to boost the region’s resilience and competitiveness through infrastructure development, including connections to southern and eastern transport corridors, as well as to attract new investments to the region. Relations with strategic partners, like the United States and new global partners, have an important role. The practical benefit of the 3SI format is bringing infrastructure issues to the focus of high-level political discussions in order to support the visibility and scope of planned and ongoing infrastructure developments and to attract additional capital to the region.

The Three Seas Initiative (3SI) is a regional cooperation format that connects the countries located between the Adriatic Sea, the Baltic Sea and the Black Sea, and includes Austria, Bulgaria, Croatia, Czechia, Estonia, Greece, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia and Slovenia.

The Three Seas Initiative is an important cooperation format for Estonia. In 2020, Estonia was the coordinator of the Three Seas Initiative and hosted the Three Seas Virtual Summit on 19 October 2020 and the meeting of the initiative’s foreign ministers on 30 June 2020. Estonia has also joined the Three Seas Initiative Investment Fund.

The Three Seas Initiative was born in 2015 out of a shared desire to develop transport, energy and digital connections along the European Union’s north-south axis in order to boost the region’s economic growth and resilience.

Web page of the Summit

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Link uudisele: The Parliamentary Summit of the Three Seas Initiative will focus on the development of infrastructure projects

The Finance Committee had amended the initial effective date and had set the effective date of the amendment as 1 March 2026. According to the Gambling Tax Act, the general tax period for gambling tax is a calendar month. Consequently, the effective date of the Act has been set for the beginning of next month, which is in line with the current IT solutions and work arrangements of market participants and the tax authority.

The bill is related to an Act that was adopted by the Riigikogu on 3 December and that entered into force on 1 January which aimed to increase the funding of sports and culture through gambling tax revenues. The entry into force of the Act on 1 March will help to quickly restore the situation for market participants and tax authorities where both types of gambling are subject to taxation at the same tax rate.

Aleksandr Tšaplõgin, Vladimir Arhipov from the Centre Party Group, Aivar Kokk, Mart Maastik from Isamaa Parliamentary Group, Mart Helme from the Estonian Conservative People’s Party Group and Riina Sikkut from the Social Democratic Party Parliamentary Group and Kalle Laanet and Peeter Ernits took the floor during the debate.

Isamaa Parliamentary Group moved to suspend the second reading of the Bill, but the motion was not supported. 21 members of the Riigikogu voted for suspension and 50 voted against. The second reading was concluded.

The third reading of the bill is scheduled for tomorrow, Tuesday, 10 February, at the plenary sitting, with a proposal to hold a final vote.

Nine interpellations were replied

Prime Minister Kristen Michal replied to the interpellations concerning the sharp increase in absolute poverty in Estonia (No. 866), the suspension of proceedings on the bill on hate speech (No. 868), Enefit Green’s investment in Tolpanvaara wind farm and the consequences of the sale thereof for the energy policy and renewable energy targets of the Estonian state (No. 870) and the significant increase in the price of communication services (No. 878), submitted by members of the Riigikogu.

Minister of Finance Jürgen Ligi replied to the interpellation concerning the presentation of false information (No. 863).

Minister of Infrastructure Kuldar Leis replied to the interpellation concerning support for the maritime sector (No. 874).

Minister of Regional Affairs and Agriculture  Hendrik Johannes Terras replied to the interpellation concerning the closure of post offices (No. 872). The debate on the issue was adjourned due to the end of the working hours of the sitting. It will continue at the next sitting.

Replies by Terras to the interpellation concerning the reform of public transport in counties (No. 873) and the worsening of the economic situation of pensioners and families with children (No. 889) were also deferred.

The sitting ended at 11.59 p.m.

Verbatim record of the sitting (in Estonian)

Video recording will be available to watch later on the Riigikogu YouTube channel.

Riigikogu Press Service
Gunnar Paal
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Link uudisele: The bill on amendments to the Gambling Tax Act passed its second reading in the Riigikogu and six interpellations were answered

Chair of the Finance Committee of the Riigikogu Annely Akkermann pointed out that in the context of the ongoing discussions on the next EU long-term budget, it was the time to focus on ensuring that the use of budgetary funds was even more transparent and the supervision more efficient. “Measurability of results is particularly important because the decisions on the budgetary allocations of the next period and assessments of their use are made on the basis of the results,” Akkermann said.

Chairman of the State Budget Control Select Committee of the Riigikogu Urmas Reinsalu noted that by 2027, outstanding EU borrowing could surpass EUR 900 billion, nearly ten times the level of 2020, before the pandemic recovery package was launched. To safeguard the sustainability of future EU budgets, it is necessary to consider the debt burden and ensure that the guarantees are solid.

The European Court of Auditors Annual report for the 2024 financial year concludes that the EU’s accounts give a true and fair view of the financial standing of the EU, and that revenue transactions were error-free. The level of error affecting EU spending was 3.6%, which is lower than 5.6% of the year before. The auditors found that irregularities affected part of the EUR 59.9 billion spent under the Recovery and Resilience Facility. This is the main pillar of the EU’s NextGenerationEU (NGEU) pandemic recovery package They noted an increasing trend in the financial impact of irregularities. They also noted issues in connection with customs duties, which are at risk of either being declared incorrectly or not being declared.

The joint sitting of the Committees starts at 1.30 p.m. in the Conference Hall of the Riigikogu and will be live streamed online. Video recording of the sitting will be available on the Riigikogu YouTube channel, and photos in the Riigikogu photo archive (Erik Peinar / Chancellery of the Riigikogu).

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Gunnar Paal
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Link uudisele: Committees of the Riigikogu get an overview of the European Court of Auditors 2024 annual report

The Chairman of the Finance Committee Annely Akkermann, members of the Committee Maris Lauri and Mart Võrklaev, and the Chairman of the Economic Affairs Committee Marek Reinaas outlined the factors affecting the state budget, the planned changes in taxation, the state of the economy, and the measures to ensure energy security. The high volume of defence investments is temporarily increasing the deficit of the current account. Next year, the state defence expenditure will increase to 5.3% of the GDP.

“This year, the budget deficit will decrease to 1.0% of the GDP thanks to increased taxes; however, the rapid increase in defence expenditure and changes in the income tax next year will take it to 4.0% of the GDP,” Akkermann admitted. She added that the deficit would be reduced step by step each year, reaching 2.8% of the GDP by 2029. State revenue is predicted to decrease by EUR 780 million due to the introduction of the uniform EUR 700 income tax exemption and the cancellation of the planned 2 % increase in income tax. The tax burden in Estonia will fall from 36.6% to 35.2%.

According to the State Budget Bill, the planned general government deficit will be 4.5% of the GDP next year, which will remain within the limits of the exemption granted by the European Union for rapid increases in defence spending. Next year’s debt burden will grow by EUR 1.7 billion to 25.9% of the GDP.

The Ministry predicts a 5.4% increase in prices this year. Akkermann referred to an analysis by the Ministry of Finance, which said that the inflation would slow down to 3.5% annually in 2026, when the increase in the prices of food and services slows down and the impact of the tax measures diminishes. 

Due to the significant increase in the budget deficit, next year’s debt burden will grow by EUR 1.7 billion to 25.9% of the GDP.

The national debt burden will increase because of all the additional costs and is predicted to reach 31.4% of the GDP in 2029, and the interest costs to 0.8% of the GDP, or EUR 417 million.

The Chairman of the Economic Affairs Committee Marek Reinaas pointed out that the economy was slowly recovering according to the forecast. “Economic growth is an inevitable requirement in tidying up the budget. I am happy to know that the economy is on its way up,” Reinaas said. “The upward curve of the economy promises a 1% increase in the GDP for this year and 2.5% for the next.”

“The Estonian economy has all it takes for a new technology intensive growth cycle. Keeping the investment environment attractive, offering clean energy, making capital accessible to businesses and changed needs in a flexible way all ensure that Estonia has a successful economy,” Reinaas explained. “To solve challenges related to energy and achieve a more affordable price of electricity we are investing into building wind farms because the Expert Panel on Competitiveness created at the Economic Affairs Committee sees this as unavoidable to ensure that uncontrollable green energy makes up 70% in our energy portfolio,” Reinaas explained.

The IMF monitors the economies of its member countries, including Estonia, in the context of the economic policy consultations that generally take place once a year. The common name “Article IV consultations” derives from Article IV of the IMF’s Articles of Agreement. IMF’s national cooperation partner in Estonia is Eesti Pank (Bank of Estonia), which publishes summaries of the missions on its website.

The mission team specifies the objectives, scope, details, timing, and expected results of the Article IV cycle. It engages in discussions on recent macroeconomic, fiscal and financial developments, prospects, risks, and policies. The mission team is interested in feedback from the Riigikogu committees on their analytical and policy agenda before the Article IV consultations.

As this is an interim mission of the IMF, the team will not prepare a summary statement and there will be no press conference at the end of the mission. However, the interim mission is important because it usually prepares the first version of the Article IV report, which is supplemented with additional topics and economic policy messages during the mission. The outcome of the consultation is a report reflecting the IMF experts’ assessment of Estonia’s economic policy. The IMF discusses important economic policy issues with all member states.

The IMF mission is headed by Vincenzo Guzzo; he is accompanied by Bingjie Hu and Carlos de Resende, and energy expert Hugo Rojas-Romagosa.

Photos (Erik Peinar / Chancellery of the Riigikogu)

Riigikogu Press Service

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Questions: press@riigikogu.ee

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Link uudisele: Representatives of Riigikogu committees met with IMF delegation

The planned general government deficit amounts to 4.5 percent of GDP which remains within the limits of the exemption granted by the European Union for rapid increases in defence spending.  Next year’s debt burden will grow by EUR 1.7 billion to 25.9% of GDP.

The government says the increase in defence spending to five per cent of GDP is the largest increase in expenditure, which will require an additional EUR 844.5 million next year. The government is planning to invest EUR 276.8 million in road infrastructure, including EUR 65 million from motor vehicle tax, and EUR 684.2 million in railways, among other things to ensure the completion of Rail Baltic by 2030.

According to the Bill, state revenues will decrease by EUR 780 million as a result of the introduction of a uniform 700-euro income tax exemption and the cancellation of the planned two-percentage-point increase in income tax. The tax burden in Estonia will fall from 36.6% to 35.2%.

Together with the tax changes, the net income of those who earn the average salary of teachers will increase by EUR 319 per month, or EUR 3,828 per year. Previous cuts in operating expenses will also apply – the total cuts in the budgets of the Ministry of Education, the Ministry of the Interior, and the Ministry of Culture will amount to EUR 94 million in 2026, to which the Ministry of Education and Research will add another EUR 18 million through a budget revision. EUR 28.9 million will be allocated for salary increase in the area of ​​government of the Ministry of the Interior in 2026 which will allow front line rescue workers, police officers, rescue coordinators, and lecturers at the Estonian Academy of Security Sciences to receive a salary increase of nearly ten percent.

According to forecasts, the average pension will increase by 5.4 percent, with EUR 210 million allocated for this in the budget. The motor vehicle tax reduction for families with children and the taxation of 8-9-seater M-category vehicles similarly to the N-category vehicles, which will come into effect in 2026, will reduce the amount of motor vehicle tax to be collected by EUR 14 million. To achieve budget neutrality, EUR 48 million from motor vehicle tax will be allocated to the consolidated project for national roads.

According to the bill, the subsistence allowance limit will be raised by EUR 20 to EUR 220 and the subsistence allowance limit for each minor child in a family will be raised to EUR 264 for which an additional EUR 4 million will be allocated from the budget.

Due to the end of the working hours of the sitting, the first reading of the Bill was adjourned before debate which will take place at tomorrow’s plenary sitting. The report by Minister of Social Affairs Karmen Joller on the implementation of the long-term national development strategy “Estonia 2035” which was on the agenda for today’s sitting was also transferred to the agenda for tomorrow’s sitting.

Verbatim record of the sitting (in Estonian)

Video recording of the sitting will be available to watch later on the Riigikogu YouTube channel.

Riigikogu Press Service
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Link uudisele: The first reading of next year’s state budget was adjourned in the Riigikogu

In a session on the EU’s position in the global economy, Tali stated that the European law-making process needs reform, including ensuring business-friendly rules, reducing reporting requirements, and making cross-border digital governance the norm. He stressed that Europe must be more independent and not depend on authoritarian regimes and third countries in its supply chains.

Annely Akkermann, Chair of the Finance Committee, spoke in a session that focused on European fiscal rules and their sustainability in the current geopolitical situation. “Well-designed and evidence-based fiscal rules are the cornerstone of the sustainability of the European Union,” said Akkermann. “Clear rules are the path to competitive growth, defence capability, and social cohesion. We need to keep the budget on track, but at the same time ensure flexibility to be ready to respond to the unexpected.”

Member of the Finance Committee Riina Sikkut raised the question of whether Member States are ready to accept that the European Defence Mechanism will shape the European Union’s defence policy. “Perhaps this would motivate Member States, more distant from Moscow, to contribute or participate more, but are we ready to shape defence policy this way?” Sikkut added, pointing out that any defence policy initiative must be subject to strict rules, similar to the European Stability Mechanism, which sets very clear criteria for the Member States.

The purpose of the Inter-Parliamentary Conference on Stability, Economic Coordination, and Governance is to foster cooperation among parliaments within the framework of the Treaty on Stability, Coordination, and Governance in the Economic and Monetary Union. The Conference was established in 2013 at the Conference of Speakers of the European Union Parliaments (EUSC).

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Link uudisele: Members of the Riigikogu attend conference on economic governance: By buying gas and oil from Russia, we are financing hybrid activities against ourselves

Currently, only banks offer instant payment services, as only they have access to the necessary current accounts at the Bank of Estonia. The Bill also provides for the possibility for other payment institutions and e-money institutions to participate in the settlement system, so that they can also participate in the instant payments market. An instant payment means a payment where money moves from the payer’s account to the payee’s account within a few seconds.

The regulatory change will increase competition in the payment services market. It can also lead to new and innovative payment solutions, such as mobile payment applications, and increase competition in cross-border payments. In order to participate in a settlement system, a payment or e-money institution must meet certain requirements to ensure the stability and integrity of settlement systems.

The bill will transpose the amendments to the Payment Services Directive and the Settlement Finality Directive and ensure the proper national implementation of these directives.

Three other Bills passed the first reading

The Bill on Amendments to the Securities Market Act and Amendments to Other Acts arising therefrom (regulation of derivatives and repo transactions) (633 SE), initiated by the Government, will improve the regulation of derivatives and repo transactions and bring it in line with international standards.

As a result of the amendments, Estonian banks, financial institutions, and large companies will have better access to international derivative and repo markets which will help increase the international competitiveness of both Estonian companies and the entire business environment.

The Bill will specify and harmonise the netting regime related to derivative and repo transactions and the qualifying parties who may enter into such contracts. The range of persons who can use a special type of collateral such as financial collateral will also be expanded.

The Financial Crisis Prevention and Resolution Act, which provides for crisis prevention and resolution measures applicable to banks, will be amended. The amendments will ensure greater clarity for banks and the Financial Supervision Authority, which carries out supervision, about their rights and obligations. For some banks, the amendments may mean that there will be no need to prepare a contingency plan and the obligation to hold crisis buffers will be reduced.

The bill will make the valuation of real estate collateral for housing loans more flexible. In justified cases, banks can make their assessment on the basis of statistical data, which is why it is not always necessary to order a separate valuation report. This will make it easier to transfer a home loan from one bank to another and will reduce the costs upon taking out a home loan or refinancing an existing one.

In addition, the insolvency regime will be amended to ensure that derivative and repo transactions are more clearly enforceable in bankruptcy and other similar situations. The regulation provides that, in a situation of insolvency, the trustee in bankruptcy cannot intervene in the conduct of such transactions.

The Bill on Amendments to the Money Laundering and Terrorist Financing Prevention Act (640 SE), initiated by the Government, will supplement the data processing functions of the Financial Intelligence Unit database. In order for data processing to be transparent and meet data protection requirements, the Act sets out what data is collected, why it is used, and how and to what extent it is processed. This ensures that the use of the database is transparent and lawful. The Data Protection Inspectorate exercises supervision over the process.

The Bill will improve the supervision of the Financial Intelligence Unit and strengthen the protection of the financial system. A major amendment is the inclusion of a strategic analysis capability in the functions of the Financial Intelligence Unit database. It will process anonymous but, where necessary, reversible data, perform profile analyses, and use text and data mining. These tools help to better prevent and detect risks of money laundering and terrorist financing in a situation where financial crime has become a business with international reach.

It will also update the architecture of the system for combating money laundering and terrorist financing and specify the procedures for setting up and operating a governmental committee and advisory committees.

At the same time, the European Union directive on measures against money laundering and terrorist financing will be transposed into Estonian law. The composition and availability of data on beneficial owners will be specified and minor amendments will be made to specify the monitoring arrangements of the Financial Intelligence Unit. All amendments are in line with international recommendations.

The purpose of the Bill on the Ratification of the Agreement between the Republic of Estonia and the Republic of Botswana for the Elimination of Double Taxation with respect to Taxes on Income and the Prevention of Tax Evasion and Avoidance and its Protocol (641 SE), initiated by the Government, is to eliminate double taxation and to prevent tax evasion and avoidance. The agreement defines how taxing rights are divided between countries, ensures equal treatment, and establishes obligations for the exchange of information on income.

The agreement is based on the OECD Model Agreement but has been adapted to the needs of Estonia and Botswana. The agreement was concluded in 2021 and signed in September 2024 in New York.

According to the agreement, the source country of dividend income may tax up to five percent of the gross amount of dividends and 7.5 percent of the gross amount of interest income. Interest remains tax-free for certain institutions and funds. Upon taxation of royalties, up to five per cent may be withheld on the amount paid for the use of technical equipment and 7.5 per cent on other fees. Estonia uses an exemption or offset method, depending on the type of income, to eliminate double taxation.

As of April 2025, Estonia has such agreements with 63 countries.

The deliberation of a Bill was adjourned

The first reading of the Bill on Amendments to the Simplified Business Income Taxation Act, the Security Tax Act and the Income Tax Act (645 SE) , initiated by the Government, was adjourned due to the end of the working hours of the sitting . The bill aims to repeal the security tax which was planned to be in effect until the end of 2028.

Instead of a security tax, the bill proposes raising the general income tax rate to 24 per cent and the corporate income tax rate to 22 percent from 2026 to ensure stable financing of the state’s defence spending and long-term strengthening of defence capabilities. The VAT rate increase to 24 percent from July 2025, which will become indefinite, will also remain in effect.

A simple, uniform, and more business-friendly income tax will apply to companies, where income tax is to be paid only on distributed, not current, profits. The explanatory memorandum points out that the amendment is also positive for the Estonian people, especially for less well-off taxpayers, as income tax is applied after the deduction of tax allowance. The current solution would have resulted in a two percent tax liability starting from the first euro.

The implementation of the security tax required the development of several services by the Tax and Customs Board, which would no longer be necessary once the Bill is adopted. IT development costs would have been estimated at EUR 950,000 in 2025, EUR 735,000 in 2026, and EUR 525,000 in 2027. The introduction of the security tax also required IT developments in the Social Insurance Board, the Estonian Health Insurance Fund, and the Estonian Unemployment Insurance Fund, which would also no longer be necessary once the Act enters into force.

During the debate, Aivar Kokk took the floor on behalf of Isamaa Parliamentary Group, Andrei Korobeinik on behalf of the Estonian Centre Party Group, Anti Poolamets on behalf of the Estonian Conservative People’s Party Group, Riina Sikkut on behalf of the Social Democratic Party Group and Maris Lauri on behalf of the Estonian Reform Party Parliamentary Group.

After the plenary session, the members of the Riigikogu plan to form a support group for fishermen, led by Riigikogu member Madis Timpson, and an Estonia-Botswana parliamentary group, led by Riigikogu member Lauri Laats.

Verbatim record of the sitting (in Estonian)

Video recording of the sitting will be available to watch later on the Riigikogu YouTube channel.

Riigikogu Press Service
Merilin Kruuse
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Questions: press@riigikogu.ee

Link uudisele: The Riigikogu concluded the first reading of a bill allowing more instant payments than before

The Chairman of the Finance Committee Annely Akkermann explained that Estonia had overcome three crises in a row and that the economy was showing a modest upturn. The new insecurities are the repercussions of policy changes in the USA, to a lesser extent also of trade tensions, but the strongest impact on Estonia’ budget has come from the need to increase our defence spending to 5 percent of the GDP. A better consolidated EU capital and energy market would give a huge boost to Estonia’s economic development.

The Chairman of the Economic Affairs Committee Marek Reinaas referred to the fact that the IMF has acknowledged the steps taken by the Estonian government over the last few years to improve our budgetary position and turn the economy on a path to growth. It has also recommended giving more attention to developing an innovative and openminded economy and carrying out reforms with a longer perspective—recommendations we can absolutely agree with.

Also present at the meeting were members of the Finance Committee Riina Sikkut and Mart Võrklaev.

The IMF delegation will also meet with the Government, Bank of Estonia, ministries, and state authorities, as well as the leaders and analysts of the Financial Supervision Authority during its visit. There are also meetings scheduled with commercial banks, professional organisations, and representatives of private businesses.

The head of the IMF delegation Vincenzo Guzzo will present the conclusions of the visit at the press conference held in the Bank of Estonia on 19 May.

The International Monetary Fund discusses important economic policy issues with every member state once a year. The outcome of the consultation is a report reflecting the IMF experts’ assessment of Estonia’s economic policy.

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Link uudisele: Riigikogu committees discussed budget sustainability and economic competitiveness with IMF delegation

In her proposal to the Riigikogu, Madise explained that if a car was registered during the calendar year, the motor vehicle tax must be paid for the days remaining until the end of the year. However, according to her, if a motor vehicle is destroyed, for example, on the first day of the year, the tax will be collected for the entire year despite the fact that the taxable asset no longer exists. If a person buys a new car, they will have to pay the tax on both the property they no longer own and the property they do own. If the property does not actually exist (it has been destroyed or lost), there is no object of taxation. In the event a property is destroyed, the second part of the motor vehicle tax, i.e. the registration fee, is also non-refundable. However, according to the Chancellor of Justice, the registration fee is refunded if the motor vehicle is taken abroad.

“In both cases, it would be possible to avoid the taxation of destroyed property in practice as similar calculations are made while taxing a motor vehicle registered in the middle of the year and while taking a motor vehicle abroad,” said the Chancellor of Justice Ülle Madise in her presentation.

“Both while speaking in the Riigikogu committees and while explaining this proposal to the public at the request of journalists, I have also said that the Riigikogu enjoys a very broad decision-making space in terms of shaping the tax system. Only the members of the Riigikogu holding the mandate of the people can decide on what kind of tax system is fair and affordable for members of society,” said Madise.

Andrei Korobeinik from the Centre Party Group, Rene Kokk from the Estonian Conservative People’s Party Parliamentary Group, Urmas Reinsalu from Isamaa Parliamentary Group, Varro Vooglaid from the Estonian Conservative People’s Party Parliamentary Group, Peeter Ernits, Kalle Grünthal and Tanel Kiik took the floor during the debate.

68 members of the Riigikogu voted in favour of the proposal.

The President of the Riigikogu instructed the Finance Committee to initiate a Bill to bring the Motor Vehicle Tax Act and the Traffic into conformity with the Constitution.

Verbatim record of the sitting (in Estonian)

Video recording will be available on the Riigikogu YouTube channel.

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Link uudisele: The Riigikogu supported the proposal of the Chancellor of Justice to amend the Motor Vehicle Tax Act