Tax hike plans to be shelved only once budget is balanced, says minister (2)
Finance Minister Sven Sester said the planned tax hikes will only be reviewed once the state budget is balanced.
Prime Minister Taavi Rõivas said the economic forecast is less optimistic due to deterioration of the foreign markets and this will press the government to make hard decisions. He said the 2017 and 2018 budgets are especially of concern as initial forecasts estimate the deficit at around 0.2 percent of the GDP.
Media reports suggest Sester proposed scrapping the accommodation sector tax exemption cut plan at a government meeting on budget strategy on Tuesday.
Cover for the ensuring budget hole could come from increasing tax on alcohol and tobacco more than was initially planned, although nothing has been agreed yet.
“Once we have reached a stage where we have balance or surplus, then we can review what opportunities we have to make concessions.
Sester said the government will make a final decision on tax matters in mid-May and the budget strategy for the next three years must be passed by the end of May.
The current coalition agreement sees a 10-percent rise in fuel excise duty each year for the next four years and VAT for hotels increasing from 9 percent to 20 percent. The fuel tax hike in particularly has caused a back-lash with 1,000-1,500 turning up to a protests last week.