The IRL Party recently proposed to scrap the income tax on salaries less than 500 euros per month.
IRL's predecessor, Isamaa, was the governing party when Estonia's flat tax system was introduced in 1994. According to this, everyone pays the same tax rate, regardless of an income. While most countries in Europe use the progressive tax system, Estonia has stuck with its structure.
The Center Party and Social Democrats have long proposed to change the tax system, saying that it doesn't take into account the social situation in Estonia, but Reform Party and IRL resisted the calls. That is, until now. IRL politicians have had a change of heart and now say that taxing the people on lowest incomes is not fair, considering the increased cost of life in Estonia.
As national elections are approaching in March, IRL said it sent out questionnaires around the country to put their idea to the test. The party said today that 72,000 people responded, and 91 percent said that they support the proposal to free people earning less than 500 euros from paying income tax.
“The income tax on lowest earners is immoral, as they have to work hard to make ends meet. Our reform will give them more breathing space,” Juhan Parts, the party's candidate for Prime Minister said.
There are 300,000 people in Estonia who would be classified under the proposed tax-free minimum reform.
Opponents from the Reform Party have previously said that IRL's plan would cost the state hundreds of millions of euros, and would therefore be unfeasible.