Finance Minister to Continue Fight for Car Tax ({{commentsTotal}})

Jürgen Ligi
Jürgen Ligi Source: (Postimees/Scanpix)

Finance Minister Jürgen Ligi has said he is not content with fellow coalition members in Parliament who have decided to drop a government plan to reduce the level of VAT deductions companies can make on vehicles used for work.

It was reported on Tuesday that interest groups had pressured the officials to scrap the bill. But Ligi had been counting on it to raise 24 million euros for the 2014 state budget. The Finance Committee suggested Ligi resort to selling additional assets and increasing state company dividends.

The committee had rejected the bill, claiming it was rushed. Ligi made the same accusation against MPs' decision, saying he plans to meet with them and keep pushing for the bill.

"Parliament is by law not allow to worsen the balance of the budget," Ligi told Postimees.

"I plan to meet with the factions again and explain the alternatives to them […] A small circle admits to the inevitability of the tax reform, but there is a lot of public criticism, which is not constructive," Ligi said.

"The Cabinet supported these bills unanimously, chiefly because road construction needed a source of financing," Ligi said.

Currently the entire VAT paid on a work vehicle can be deducted, but a Finance Ministry bill would have limited it to half or 2,000 euros, whichever is less.