The City of Tallinn unveiled a package of emergency situation support measures on Wednesday, which among other things includes not collecting rent from businesses operating on city-owned properties and reducing the advertisement tax by half.
The measures are planned for periods ranging from three months through the end of the year, depending on the specific measure in question. The implementation thereof will decrease Tallinn's own revenue, due to which the city government will be drawing up a supplementary city budget. The business support package may impact the city budget by as much as up to €4 million.
"Businesses are naturally in a difficult situation due to the emergency situation, movement restrictions and the reduction of many city residents' incomes," said Mayor Mihhail Kõlvart (Center). "The reality is that life ground to a halt, and the situation is shocking for business-owners. We are offering measures first and foremost to businesses that are partners to the city that would improve their cash flows, reduce their burdens and help them survive the crisis."
In order to improve businesses' cash flows, the city government decided it would pay businesses for goods and services rendered within ten calendar days of accepting work or receiving the goods, rather than the usual 21 or 30 calendar days. The city will also stop enforcing contractual penalties in cases of difficulties fulfilling orders or supply difficulties caused by the emergency situation, and will extend deadlines by a reasonable amount. Where possible, it will employ shorter payment intervals for long-term contracts.
The city pays nearly 15,000 bills each month whose payment deadlines will be affected by the decision. In 2019, the city had transactions with nearly 16,000 businesses.
The city government also decided to implement a 50 percent discount on the ad tax, as the outdoor ad market has essentially come to a standstill.
All municipal tenants (including dining, retail, service, educational, sports, hobby, art and cultural establishments as well as foreign media businesses) will be 100 percent exempt from paying rent. In the case of certain kinds of rental agreements, the situation may be resolved on a case-by-case basis. All tenants of the domain of Tallinna Turud, the operator of several markets across the capital city, will likewise be up to 100 percent exempt from paying rent. Tenants who use municipal property as office space will receive a 20 percent discount on rent. These measures do not extend to utilities payments.
Tallinn will continue paying support for sports activities and will not collect rent on sports facilities.
"Based on the difficulty of the situation and reduced payment of copayments, the city will help sports clubs as much as possible, and we will continue paying sports activities support to sports clubs on the premise that training is continuing remotely," Kõlvart said, adding that the rent exemption would initially last for a period of three months.
The expenses of canceled conferences and cultural and sporting events will be compensated to the extent that businesses have already paid for them. This decision will apply to businesses that have submitted an application for the partial support of an event and have received this support, but have been forced to either cancel or postpone the event due to the emergency situation.
More measures to come
The mayor said on Wednesday that these measures are short-term, and that a program of long-term measures is currently being worked out in the city government.
Measures that affect changes to local tax loads also require the approval of Tallinn City Council. According to Kõlvart, they have already spoken to the opposition, and the latter currently supports all rapid measures in question. "These decisions must be adopted quickly, and, where possible, implemented immediately," he said. "That which needs to be approved in the city council will be submitted for approval, but we are discussing it with the opposition."
Deputy Mayor Aivar Riisalu (Center) added that Tallinn's balance sheet is sufficiently adequate for the implementation of these support measures, and that the city's operative measures should help smaller service providers with no hope of state support in particular.
Regarding the decision to halve the ad tax, Riisalu noted that the impact of this measure on the city budget will be significant, as the city typically brings in some €5 million per year in ad taxes.
Editor: Aili Vahtla