As politicians call people to drive economical vehicles, state spends 23 million euros annually on cars

Minister of Agriculture is driving a Toyota Land Cruiser (photo is illustrative) (Toyota)
4/24/2015 1:59 PM
Category: Politics

In the light of the ongoing debate about rising excise duties on fuel, Estonian daily Eesti Päevaleht reported today that Estonian government and public institutions currently use almost 3,000 cars and the state spent 23 million euros last year to run this car fleet.

While the new coalition government want to increase excise duty rate on liquid fuels and some politicians - such as PM Taavi Rõivas and Education Minister Jürgen Ligi – have indicated that people should use smaller cars and drive less in order to be less affected by the planned rise in fuel prices, it has emerged that the state-run car fleet increased by a whopping 700 cars last year.

The coalition decided to rise excise duty rate on petrol 10 percent each year from 2016-2019, and on diesel 14 percent in 2016, and 10 percent thereafter. This should triple the state income from motor fuel excise from 45.9 million euros in 2016 to 134.8 million in 2019. The excise duty rate for liquid fuels is currently at 422.77 euros per 1,000 liters. Coalition politicians have so far defended the decision by a need to increase child allowance and reduce labor taxes.

Finance Minister Sven Sester said that alternatives to plug holes in the budget and pay for coalition promises were discussed, but excise duty hikes were preferred to tax on company profits, an increase in income tax and other taxes.

Rõivas said last week that the duty rises should increase the price of fuel 5 cents per liter per year and if taken into account the already fluctuating oil prices, people might not even notice the effect. In an interview with Eesti Päevaleht, he also suggested that people who feel affected, should consider purchasing a more economical car. His words were echoed by Ligi on Thursday, who said that protesting against a 5 cent increase in the price of petrol is embarrassing, adding that such changes take place every day in petrol stations and burning fossil fuels is something to be ashamed of.

However, according to Alan Vaht, a board member of Estonian fuel station chain Olerex, to an average motorist who uses 70-100 liters of fuel a month, the decision to increase excise duty will mean a 26 percent prize hike and 260-370 euros of extra costs per year. Estonians, who in terms of purchasing power are at the bottom six in the EU, will have to pay more fuel excise than the wealthiest nations in the union, Vaht wrote in Postimees. What families with children gain through increased child support, will hardly compensate for the general rise in living expenses that the excise duty rise will inevitably bring, he added.

Vaht's opinion was backed up by Ruta Arumäe, a former economic adviser to Rõivas. "The state's economic policy is governed by Excel tables, it's a zero-sum game," Arumäe wrote in an opinion article for Postimees. "No one is analyzing the consequences of these decisions and there is no general, governing idea on where the economy is heading. The tax hikes invented during coalition talks to counter the squeeze are not a strategy, but populism and stagnation," she continued, adding that piling up election promises and using excise duty to fund them, is a very bad idea.

Following the debate and suggestions by some coalition politicians that Estonians should use more economic cars, Eesti Päevaleht zoomed in on the official cars currently used by the ministers and government institutions. The daily reported that there are 2,907 cars in use - 700 more than in 2013 - and the state spent 23 million euros to run this fleet last year.

Most ministers use Audi A6 as their official car, but there are also couple of Mercedes Benz E300, Škoda Superb, and a Volvo S80 and Toyota Land Cruiser in use. Prime Minister is transported by an Audi A8L, which for security reasons is run by the Police and Border Guard. The state spends almost 1,000 euros per month on each car in leasing payments alone.

The planned hike in excise duties has created a massive backlash in the public discourse. Over 85,000 people have joined anti-excise-hike groups in Facebook and a large protest meeting is planned to take place this Sunday in front of the Estonian Parliament.

S. Tambur

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