Cabinet Finds Funds to Avoid Car Tax-Related Budget Cuts ({{commentsTotal}})

Finance Minister Jürgen Ligi
Finance Minister Jürgen Ligi Source: Photo: Postimees/Scanpix

After Finance Minister Jürgen Ligi said last week that he is ready to cut the budget by 1.2 percent if the vehicle VAT deduction law is not overturned, the Cabinet today said that it has found the 24 million euros to at least delay the overturning.

“In addition to dividends themselves [three million euros from state companies], income tax from those dividends and from this year's will total 7.9 million euros. The third sale of 4G licenses by the Ministry of the Economy [will bring] 5 million euros, government reserves, 3.5 million, sale of state land, 1.8 million and the reevaluation of expenses, 2.7 million,” Sven Sester, head of the Finance Committee told, ETV on Wednesday.

Ligi said last week that if the plan to cut VAT deductions on company cars is not passed, 24 million euros, which had already been written into the 2014 state budget, will have to be found elsewhere.

The draft law, which proved unpopular among both the opposition and the coalition, would have restricted tax breaks for passenger cars bought in the name of a company, but which are also used for private purposes.

Ligi vows to continue fight

“Taxpayers are not asked for their permission, but their opinion, which we have done,” Ligi said on Wednesday, speaking on ETV's Foorum program, adding that tax policy is not based on whether people want to pay tax.

He said that the idea should still be implemented, as it would be part of a juster lax system. He added that the government would not be increasing tax, but eliminating exceptions, such as using tax deductible business vehicles for private, everyday use.

Economy minister Juhan Parts also confirmed that his ministry will reintroduce the bill in the future.

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