Minister Opposes Proposal to Cut Unemployment Tax

Photo: Postimees/Scanpix
9/18/2013 9:12 AM
Category: Politics

In a move supported by both the unions and employers, the supervisory board of the Unemployment Insurance Fund has proposed to reduce the unemployment benefit tax from 3 percent to 2.1 percent next year.

Minister of Social Affairs Taavi Rõivas has expressed disapproval for the nonbinding proposal.

"I believe the Cabinet will certainly make a thought-out decision. The Cabinet certainly has a sense of responsibility for the bigger picture," Rõivas told uudised.err.ee.

"We will analyze all of the arguments. I believe the decision will be very thoroughly worked out so we can be sure that the amount of Unemployment Insurance Fund resources is sustainable," he said.

The proposal presented today was supported by four members of the supervisory board representing the unions and employers, and was opposed by the two members representing the government.

"My standpoint is that the Unemployment Insurance Fund's most important duty next year is to ensure sufficient services to continue the reduction of unemployment," Rõivas said.

"Whatever happens, we must have sufficient resources. If that duty is 100 percent guaranteed then we can talk about whether to change the tax rate or not," he said.

"My standpoint is similar to that of the employees and sometimes to the employers - that the unemployment tax must be as small as possible; but I would add the other half of the sentence: it must be big enough to provide all of the necessary services."

Advocates of lowering the tax rate have pointed to the massive Unemployment Insurance Fund reserves, which amounted to nearly 500 million euros in July.

The unemployment tax currently consists of a 2 percent contribution from the employee and a 1 percent contribution from the employer. It was last reduced at the beginning of this year, having previously been at 4.2 percent. Before the economic crisis, it was at just 0.9 percent.


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