Talking about taxes, one should look to the future, while past mistakes need to be corrected first so Estonia could once again have a tax system that is not too much of a burden on our people, Erkki Keldo writes.
I'm glad that the Reform Party's tax plan has merited plenty of attention next to other newsworthy events recently. As reflected by surveys before elections, tax topics matter a great deal to people. A poll by Kantar Emor suggested taxes were the main topic of the previous elections.
Just like fixing the tax system was one of the principal election promises of the Reform Party for which the people gave us a great mandate. It translates into a clear signal from the people that they expect tax changes, instead of continuing with Jüri Ratas' stale tax hump plan.
I'm hardly surprised by the fact left-wing parties have once again opted for inciting class hatred by describing our plan as a present to the wealthy or an outdated system. I must disagree. The current tax system hits the hardest people making between €1,025 and €1,620 a month.
They are our teachers, policemen, rescuers, cultural workers, nurses and unfortunately many working pensioners. The list goes on. These are ordinary Estonians who should not be paying for the government's overspending and a third of the salary advance of whom the government currently takes away.
The current system where people's basic exemption starts falling from an income of €1,200 sports a marginal tax rate of 31.1 percent. This means that a raise of €100 will only leave you with €68.9. Whereas this injustice only applies until one's salary hits €2,100 a month, with the tax rate falling back to 20 percent after that.
We feel that punishing the middle class with a higher tax rate is unfair and we want to put and end to it so everyone could have the same basic exemption of €500.
It would render the tax system simpler and far more comprehensible – it would no longer be necessary to predict one's annual income or fear having to pay more at the end of the year should there be additional income.
Our opponents have said that we cannot afford the change. It is somewhat hypocritical, coming from a government that has allowed the budget to fall into deficit by more than a billion euros over three years. At the same time, I want to commend Isamaa chairman Helir-Valdor Seeder who has said our idea is worth discussing, because the current system is doomed either way.
The Reform Party has always been serious about financial affairs, which is why we've mapped out our tax plan in two stages to reduce its impact on the state budget.
We believe that the money can be found in the conditions of a growing economy. However, it will become more difficult with each passing year as the unjust tax hump will apply to more and more people as long as growth is contributing to salary advance. Therefore, the time to abolish this complicated system is now.
A simple, just and comprehensible tax system has served as one of the cornerstones of Estonia's economic and business success. The Reform Party agrees that tax debates need to look to the future, but we need to correct past mistakes first to once again have a tax system that would not be too much of a burden on our people.
Next, we will need to look at changes in society in terms of working and earning income that are creating new challenges for a comprehensive tax system. We are more than happy to participate in this debate.
Editor: Marcus Turovski