Taxpayer's association: Reps case shows company car tax incentives needed

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Rush hour traffic on Pirita Road. Source: Siim Lõvi /ERR

The Estonian Taxpayer's Association (EML) says that using a company or official car for the school run should be viewed purely as a business trip. Tax incentives might help employers ensure the work-life balance for their staff, the organization says, following a media furor about use of a ministry car which led to the recent resignation of education minister Mailis Reps (Center).

EML board chair said noted the Gender Equality Act states that in promoting equality between women and men, an employer must make working conditions amenable for both, facilitating the work-life balance by taking into account the needs of employees, but this should also apply to taxation.

While the tax aspect of the use of Reps' official car for ferrying some or all of her six children had been accounted for, business daily Äripäev (link in Estonian) had said that as a public sector body, the education ministry was in effect robbing peter to pay paul, since the tax would be paid via public funds.

Allikalt said: "We consider that while an amendment to the law is not immediately pressing, it is sufficient for the Ministry of Finance or the Tax and Customs Board (MTA) to issue a guideline under the Taxation Act which would interpret the employer's car use under the employer's obligations as found under the Gender Equality Act, to reconcile work and family life."

Allikalt added that employer costs such as on a company car, while taxed as a special benefit, can end up being tax-free if the vehicle is used primarily in the employer's interest (i.e. for official work duties) for the private sector at least, as private employers can also generally deduct VAT.

Where the line should be drawn on whether an expense is more in the interest of employer or employee was open to both interpretation and ever-changing values, Allikalt went on.

A solution, the EML thinks, would be an assurance that employers would be supported via tax exemption in helping an employee balance work and family life along those lines, in private sector, public sector, NGOs, company board members and the self-employed alike.

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Editor: Andrew Whyte

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