Caving to pressure from interest groups, the Cabinet has scrapped a plan to significantly reduce the VAT deductions on company cars.
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, reported uudised.err.ee.
The ministry said the measure would have raised 24 million euros. Officials must now find other means to cover a hole in the state budget, through selling additional assets and increasing state company dividends.
Finance Committee Chairman Sven Sester (IRL) called for a more moderately paced but broad review of vehicle taxation.
"The drafting of these bills was rushed and there was a lack of dialogue with interest groups. In the Finance Committee's parliamentary hearing, it became clear that additional analysis was needed. The Finance Ministry and the Tax and Customs Board need more time to deal with this matter," Sester said in a press release.