SDE MP: Basic tax exemption must rise in-line with minimum wage hike

SDE MP Jevgeni Ossinovski
SDE MP Jevgeni Ossinovski Source: Siim Lõvi /ERR

Together with next year's 12-percent increase in minimum wage, the basic tax exemption threshold should rise in proportion, opposition Social Democratic Party (SDE) MP Jevgeni Ossinovski says.

Ossinovski made his remarks following news that the minimum wage will rise to €654 next year - an increase of €70 - while the hourly wage will rise to €3.86, after unions and the Employers' Confederation came to an agreement on Tuesday.

The increase is the first in two years, since the coronavirus-blighted year of 2020 did not see a rise in minimum wage.

Ossinovski said: "I commend employers and unions for this good agreement. Considering that the minimum salary did not increase this year, next year's minimum salary growth will improve the situation for people earning a lower income," Ossinovski said.

"It is now important that the state as the third party should, in turn, make a fair contribution and increase the basic exemption. I want to recall that in 2018 we finally made it this far that both the minimum monthly salary and basic exemption were both €500. Unfortunately, the state has subsequently not kept pace with the minimum salary growth," Ossinovski continued.

In 2022, minimum salary earners will be paying €31 in monthly income tax, with those receiving the average-level pension having to pay €18 per month.

"Raising the basic exemption is the right step both from the social policy perspective as well as in terms of economic policy. That way, income disparity will decrease and the stimulus to work legally will grow. For me, it is also an issue of values - subjecting the minimum salary to income tax is simply not fair," Ossinovski added.


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Editor: Andrew Whyte

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