Social Democrats backpedal on car tax plan

Traffic in Tallinn (photo is illustrative).
Traffic in Tallinn (photo is illustrative). Source: Siim Lõvi /ERR

The Social Democratic Party (SDE) no longer feels strongly about laying down a car tax in Estonia, which the party has pursued for a long time. Minister of Economic Affairs and Infrastructure Riina Sikkut (SDE) said that there are far more important topics to tackle.

The car tax and congestion fee ideas surfaced in a recent Ministry of Economic Affairs' green policy working group analysis. ERR learned of the fact from Minister of Foreign Affairs Urmas Reinsalu (Isamaa) who said that the document included proposals to continue working on the tax plan.

"I challenged it in the cabinet. We took it off the agenda and agreed with the economy minister that the government will simply make a note of the working group's initiative," Reinsalu said.

"There are different ideological views among parties, while Isamaa is definitely not a fan of additional taxes," he added.

Reinsalu said that only taxing luxury cars would hardly find more support. "The ideological intention behind such taxes is not to generate more tax revenue at the expense of owners of luxury vehicles. No. The intent there is to change the person's way of life, which is a fundamental problem for me. There is nothing criminal about a person being able to afford a greener and safer car," Reinsalu said.

Riina Sikkut told ERR that she does not hold it sensible to lay down a car tax in Estonia, nor one just for luxury cars, even though the Social Democrats have promoted the idea in the past.

"The biggest problem with a car tax for me is that because owning a vehicle is a necessity in many areas outside cities, the tax would be collected disproportionally from people in rural areas who do not have the alternative of convenient public transport," Sikkut remarked.

"I do not harbor strong feelings about a car tax. I do not believe it could solve transport emissions or other problems by itself. However, it is an instrument with which to alter behavior. If it has a role and if a political agreement can be reached, it cannot be ruled out; however, I believe we have more important and greater changes we need to make," the minister suggested.

Sikkut still considered a luxury vehicle tax sensible in 2019. She proposed taxing new cars that cost over €50,000 with a 10 percent rate to fund research.

SDE also made it an election promise to lay down a luxury tax for vehicles costing over €50,000.


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Editor: Marcus Turovski

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