Government approves mining tax increases ({{commentsTotal}})

Mining of oil shale
Mining of oil shale Source: Photo: Pärnu Postimees / Scanpix

The Cabinet today approved a plan to increase tax on mining by 3 to 6 percent a year from 2016-2025.

The lower end of the increases will affect the nation's shale oil rock industry, the mainstay of the energy sector, with prices increasing by 3 percent each year during the 10-year period.

“Fixing environmental taxes for the next 10 years will give for the first time companies assurance,” Environment Minister Keit Pentus-Rosimannus, who is poised for a switch to the Foreign Ministry, said.

She added that the tax increases are a signal to companies that creating pollution and the use of non-renewable resources will not get cheaper in Estonia, and businesses will have to pay an honest fee.

Viru Keemia Grupp, the largest private shale oil mining company, funded a nation-wide ad campaign against the price hikes, saying it could bankrupt the industry and make 24,000 people redundant. The company recently asked the government to increase its annual mining quota from 2.7 to 4.3 million tons.

Other critics have said the tax should be pegged to the world market petroleum prices. Aivar Sõerd (Reform Party MP) said that would make the national budget, which already draws more than 100 million in taxes from the industry annually, too unstable.

The plan does leave a back door for changes before 2020.

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