Representatives of Estonia's major political party say that the issue of land tax is unlikely to be prominent during campaigning ahead of the March 2023 general election, in part because revenues mostly go to local government rather than the state.
The politicians made their remarks in the wake of the latest data from the Land Board which states that land values have risen considerably since the last valuation was conducted - an evaluation which took place over 20 years ago.
Reform's finance minister, Annely Akkerman, had recently tentatively suggested a rise in land tax could help address the issue of the state budget deficit.
Former minister JaakAab (Center) says the land tax has a specific place within the revenue base of municipalities, and while this income is not very substantial, land must certainly be taxed correctly.
At the same time, Aab says he does not consider it likely that any active debate will arise on the matter ahead of the March 2023 general election, due to the political risk that would bring.
Aab said: "In the run-up to elections, no one wants to talk about such an unpopular issue, but the problem is that our country's revenues are relatively thin on the ground, meaning all political parties need to take a look at themselves and admit if they see any deficit in the state budget. We are treading on thin ice. Should a crisis arrive, our resources will not be able to last."
Meanwhile spokesperson for the coalition Reform Party Kajar Kasar said:
"The Reform Party's electoral manifesto has not yet been finally approved in respect of its finance component, but there is currently no proposal to increase land tax or amend the land tax system,
"Instead, it will be stressed that the tax system must burden the Estonian people as little as possible," he went on.
Aivar Kokk (Isamaa), who chairs the Riigikogu's finance committee, said that the tax exemption for the land underneath a dwelling had already been carried out at the beginning of the last decade under Isamaa's tutelage, adding that the party still believes that the home is a sacred place, meaning charging land tax on it would be unfair.
He said: "We have to keep the surroundings of the house in order and also mow the grass on municipal land and clear roads of snow if they border the main road. In most settlements and cities we have to do this work," Kokk listed the responsibilities of landowners and added that in the current economic situation, the increase in land tax would affect both entrepreneurs as well as an overwhelming burden for people, because the rise in electricity prices has already slowed down the economy.
Moreover, Kokk said, hiking land tax on agricultural or forested land could impact negatively on those sectors.
Isamaa opposed legislation passed by the previous Reform/Center administration which would have put in a provision which would have made it possible to hike land tax by 10 percent per annum.
Siim Pohlak (EKRE), who also sits on the finance committee, said that any kind of tax increases were pointless in the present conditions of skyrocketing home costs and the highest rate of inflation in the EU, and should therefore be off the table.
Again, since tax receipts go to local government budgets, the issue was unlikely to be a major one at the March 2023 general election, he said.
The Social Democrats (SDE) say they have not considered the issue of land tax so far; the party's deputy Riigikogu whip Kalvi Kõva said that when Riigikogu sittings start up again next week, the matter can be talked about if needed.
Jaak Aab noted the political decision to exempt 1,500 sq. m of land under a home from land tax had become a norm, which people were used to, but at the same time, he said, the fact that the land values remained unchanged literally for decades was the fault of the state and had led to inequity, something which he said he addressed when Minister of Public Administration (effectively minister for the regions) which he last held in the Reform/Center coalition which exited office in the summer.
Since the land tax can only be hiked by 10 percent per annum, the level matching the value will only be attained in 10-15 years, he added.
Reform's new finance minister Annely Akkerman had recently said that the state needs to find new sources of revenue, as it is living beyond its means. Hiking the land tax was one such source, she said.
In general, Reform has not crystalized its stance on the issue yet and may not be until late on this year or early in 2023.
Local governments will start setting new land tax rates from the summer of next year, subject to the legislative rules- ie. the 10 percent per year cap, and a five-fold reduction in
Editor: Andrew Whyte