Coalition disputing amendments to income tax-free minimum

Euros in a wallet.
Euros in a wallet. Source: Pixabay

Coalition partners are arguing over possible tax changes in the context of high inflation. Prime Minister Kaja Kallas (Reform) says that extending the income tax-free minimum to all taxpayers equally would help people to cope with the rapid rise in prices. The Center Party said that the tax-free minimum should rather be raised, but its current gradation must be maintained.

At present, the general tax-free income rate is €500 per month, but the higher the salary, the lower it becomes. The Reform Party said that tax-free income should not depend on annual income, it would benefit anyone with a salary of more than €1,200 per month.

"We have exceptionally fast economic growth, it also means big price rises, inflation. People are worried about the price rises. Our solution would be that people can keep more money and in order to do that, the tax system should be amended. Of course, our wish would be that the €500 income tax exemption would apply to everyone, regardless of income," Kallas said.

The chairman of the Center Party, Jüri Ratas, also said that the income tax-free minimum should be changed. However, the Center Party said that the minimum should be raised and the gradual reduction should be maintained.

"On the one hand, I think that this tax-free minimum is a bit out of date. On the other hand, the gradual idea that is written into it should definitely be preserved," Ratas said.

A few days ago, Ratas said on Vikerraadio on Monday that it would start a discussion in the government to reduce fuel excise duty, because, for example, half of the final price of 95 petrol goes to taxes.

"We see the prices of petrol and diesel at petrol stations, I believe that politicians need to react. We are discussing this with the coalition today (Monday - ed.). This needs to be discussed and the messages sent out," Ratas said.

Kallas noted that in her opinion, the reduction of excise duties will not help bring inflation down.


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Editor: Roberta Vaino

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