Finance Minister Threatens Budget Cuts if Vehicle VAT Deductions Not Removed ({{commentsTotal}})

Source: Photo: Postimees/Scanpix

Finance minister Jürgen Ligi has said that if the controversial plan to cut VAT deductions on company cars is not passed, 1.2 percent of each ministry's budget will, in effect, be cut.

If the bill in not passed, the state will lose out on 24 million euros that is already written into next year's state budget, uudised.err.ee reported today.

Opposition MP Eiki Nestor said that the minister's ultimatum must not be taken seriously, as a motion to hold cut-backs until a potential source or revenue materializes is absurd, and illegal.

Ligi told ERR radio today that not passing the bill would deem the budget illegal, as the deficit would then be too large. He said that the current opposition is mainly driven by interest groups, not public interest.

The bill was tabled in Parliament several weeks ago, but received little support as IRL and Reform Party MPs said they would raise the money by selling off state assets and increasing dividends at state companies.

The draft law would restrict tax breaks for passenger cars bought in the name of a company, but which are also used for private purposes.