Prime Minister Andrus Ansip has spoken out in defense of Estonia's current flat tax system, saying that it has proven to be viable and successful, and that there is no reason to change it.
“I don't understand the talk saying that we have an inept tax system,” Ansip said in a live interview on Raadio 4. “Over the last ten years Estonia has had the highest economic growth among all the countries in the European Union.”
Earlier this month Parliament rejected a proposal by the opposition Centre Party to move to a progressive tax system, however the idea continues to receive support from members of the Green Party, Social Democrats and unions.
Ansip also pointed out that Estonia has the lowest public debt in the EU, 7.9 percent of GDP, which he said could be paid off at any time from the reserve funds.
“If we had a bad tax system, we wouldn't now have these reserves,” he said.
Introduced in 1994, Estonia's flat income tax now stands at a rate of 21 percent. The Centre Party's proposal would have set the rate at 18 percent for those earning less than 373 euros per month, 26 percent for those earning 373 to 1,330 euros per month, and 33 percent for those with higher incomes.