Coalition Talks Haggle Over Child Benefits, Income Tax ({{commentsTotal}})

Tax and Customs Board
Tax and Customs Board Source: Photo: Postimees/Scanpix

The Reform Party and Social Democrats have agreed on raising child benefits and lowering the income tax in their coalition talks, using various sources and means to balance the expenses.

Minister of Finance Jürgen Ligi told ETV on Monday that the expenses will be balanced with straightforward saving, better financial management and raising the excise duty on tobacco and alcohol. Also, changes will be made to how fuel with fiscal markings is used.

Prime minister candidate Taavi Rõivas told ETV’s morning program today that the reduction of the income tax has been factored into the budget, but raising child benefits will need additional financial cover. The offset is around 200 million euros.

Sven Mikser, head of the Social Democrats, said Monday evening the key issues for his party in the coalition talks are children and family policy, education, and sustainable economic and agricultural policies.

The new coalition plans to cut labor taxes and bring the income tax down to 20 percent, increase the tax-free minimum to 154 euros and support the reduction of the unemployment insurance rate by 0.6 percent.

Child benefits will increase to 45 euros for the first and second child and by an additional 45 euros according to need. The benefits for a third child will be raised from 76.7 euros to 100 euros. Defense spending will be at least 2 percent of GDP.

Reorganizing the use of fuel with fiscal markings should bring in around 60 million euros and improving the financial management of ministries should save around 15 million euros, Rõivas said.