Ansip Defends Chosen Taxation Model
Prime Minister Andrus Ansip said that Estonia has a high share of indirect taxes but the tax collection system should be evaluated by its overall performance.
He was speaking in Parliament on February 8 in response to Centre Party faction head Kadri Simson, who brought up an annual European Commission study on tax trends. The study found that Estonia has a third-highest share in the EU of indirect taxes which make up 42.4 percent of total tax burden.
One of the most significant indirect taxes in Estonia is value-added tax (20 percent on most goods). Excise duties on various goods also make up a fair portion of the overall indirect tax amount.
Ansip said that a country had to choose one or another system: either more direct taxes, more indirect taxes or more property taxes. He said that the choice has been deliberate and that property taxes and capital gains taxes are "nearly non-existent" in Estonia.
Ansip acknowledged that Spain and Greece have a low share of indirect taxes.
"But the end result should be the criterion," said Ansip. "Tax collecting efficacy is good in Estonia, and public finances are in order, so let us not align ourselves to those who have non-existent effectiveness in tax collection with public finances out of order."
He said the tax system is effective and that tax discipline is good. He said individual tax rates should be compared to get the picture. "We see that tax rates in Estonia are lower than they are in our neighboring countries," he said. But overall tax burden is lower south of the border because tax collection efforts are worse, Ansip added.
Kristopher Rikken