While officials of the new coalition announced that they would try to remove the 0.5% social tax cut from the 2017 budget bill, Chancellor of Justice Ülle Madise finds that this could only be done for extraordinarily grave reasons.
A tax cut that is part of a bill already on the way to becoming a law couldn’t be canceled just like that, Madise said on ETV on Wednesday. If the new coalition really wanted to throw the outgoing Reform Party government’s 0.5% social tax cut out of the 2017 budget bill, they needed to come up with extremely serious reasons. Otherwise they would run counter to the legitimate expectations of entrepreneurs.
The Constitution allows the Riigikogu to change tax laws, and with a change of government, it was natural that also policies would change, Madise said. This didn’t mean, however, that tax changes could be enacted at a few weeks’ notice.
“If the Riigikogu wishes to move forward in accordance with the timetable to cancel the tax reduction already scheduled for Jan. 1, then in accordance with the court practice of our state it should demonstrate what the very extraordinary circumstances are that justify a change like this. At present, advisers to the Office of the Chancellor of Justice see no such circumstances,” Madise said.
The chancellor of justice responded to a request by chairman of the Riigikogu’s Finance Committee, Remo Holsmer (Reform). A bill submitted by the Center Party will be up for its first reading on Thursday that would repeal the social tax cut reducing the social tax rate from 33 to 32.5%, and further from 32.5 to 32% in 2018.
Estonian law requires that tax changes that work to the disadvantage of the taxpayer be announced at least six months before they take effect.
Editor: Editor: Dario Cavegn