Coalition hinting at unity on energy VAT reduction bill

A Riigikogu sitting, in this case with government ministers in attendance.
A Riigikogu sitting, in this case with government ministers in attendance. Source: Siim Lõvi /ERR

A bill aimed at slashing VAT on energy bills is being held-up at the Riigikogu – partly because the chamber is nearing the end of a four-week winter recess in any case – but also as the two coalition partners, Reform and Center, aim to patch up differences on the bill.

While Reform opposed cutting VAT on electricity, natural gas and district heating, amid soaring prices, Center generally approved it, prompting speculation that its political intention had been to divide the two coalition parties.

However, Center's leadership has softened its stance, saying there will be no split with Reform on the matter and, if VAT is to be cut at all, this should happen over a far shorter time-frame than originally proposed.

The bill, tabled by Isamaa late last year, looked at one point like it would have split the coalition MPs votes between Reform (against) and Center (for), which given support for cutting VAT on energy bills among MPs from the otherwise diametrically opposed Conservative People's Party of Estonia (EKRE) and the Social Democrats (SDE), in addition to Isamaa, sponsoring the bill, would mean the bill would have had a strong mathematical chance of passing.

Center leader Jüri Ratas, who also happens to be speaker of the Riigikogu, said that a coalition split was not imminent, however.

"What will now become of this bill will have to be discussed by the coalition council and the party groups, when the sittings of the Riigikogu resume. The principle is that the coalition will work together on these issues."

Reform reportedly also expects Center to stick with it.

The party's Riigikogu group chair, MP Mart Võrklaev, said: "The logic of a coalition is that you get to do the things that the coalition has agreed upon.

"It's not uncommon for an opposition to try to bring in bills that one coalition partner likes. I hope that we will act as a united coalition," he added.

As to the policy of cutting VAT proposed in the bill, Võrklaev said it was: "Time-consuming enough, second, it is complicated enough, and third, it is actually, per consumer, less effective. And, conversely, it is extremely costly for the state."

Isamaa tabled its bill on December 7.

The bill would slash VAT on natural gas, electricity and district heating bills from 20 percent, to 9 percent, at a time when record prices have been posted in all three categories, just as winter arrived.

The move would not be permanent, but would last to the end of this year, under the terms of the bill.

The Riigikogu broke up for Christmas on December 16.

Leading Center members who support the bill include economic affairs minister Taavi Aas, who noted his support at the weekend, though proposed shortening the term for the reduced VAT to the end of March this year – which Ratas concurred with.

Ratas told ERR that: "It has really been the principle of the Center Party that a reduction in VAT during the heating season, as the Minister of Economic Affairs and Infrastructure has proposed, [just] for the first three months of the year, would be realistic."

Meanwhile, given the urgency of the matter – temperatures remain generally low and prices generally high – Isamaa chair Helir-Valdor Seeder expressed frustration that the bill's own in-fixed deadline would be missed.

He said: "Naturally, in the course of the procedure, we are ready to find a compromise and find solutions. This is a temporary, and now urgent, bill. It could have and should have been dealt with as early as December. We are in January and we do not know how fast the coalition will agree to move forward with processing the bill."

The Riigikogu returns to work next Monday, January 10.


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Editor: Andrew Whyte

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