The Social Democratic Party's (SDE) coalition negotiations delegation member Jevgeni Ossinovski told Vikerraadio that tobacco and alcohol excise duties will be hiked in cooperation with Latvia.
Ossinovski said that the talks concentrated on achieving an acceptable state finances situation, which recent tax burden just cannot achieve. Fixed costs have been created in the process of pursuing good things, while no additional sources of revenue have been found, the politician said.
"Hiking taxes is never a goal in itself and they need to be raised as little as possible. All manner of tax hikes hamper the economy, meaning we had to find those in the case of which this effect would be smallest. Property and ownership taxes are least distorting. As concerns excise duties, but also instruments that affect health or environmental behavior, money is not the only goal," Ossinovski suggested.
"We hope to agree on hiking tobacco and alcohol duties together with Latvia. The excise duties will be raised gradually, over the years," he added.
The SDE politician also revealed that changes to land tax organization follow the need to improve the financial situation of local governments. "We have revised the land tax system, and valuation of land will be regular in the future. The incoming regional affairs minister will be tasked with boosting the financial autonomy and sustainability of local governments. Peripheral municipalities need to be given greater financial capacity, which will have to come from redistribution at the expense of their wealthier counterparts."
Local governments should also have more say in matters of taxation, Ossinovski suggested, adding that he wouldn't mind a local tourism tax.
He said there would not be additional VAT exceptions, while a car tax cannot be ruled out.
"When it comes to cars, it is clear that changes are needed in Estonia, which is on top in Europe in terms of vehicles per capita. But it makes for a next-stage matter as people in Tallinn can choose whether to drive a car or use public transportation, while many in the countryside do not have that choice. We will [first] reform county public transport to create realistic choice. We do not expect it to be free, while it has to be good," Ossinovski said, adding that Tallinn's free public transport system is working well and there is no need for changes there.
The sides to the incoming coalition had considerable ideological differences concerning the universal healthcare system. "Even laymen know that the revenue base of solidarity-based health insurance needs to grow to ensure service continuance. Even just making today's service available requires additional resources. Our coalition partners prefer developing private medical insurance to improve the availability of healthcare services for the wealthy, while we say this will be achieved at the expense of less fortunate people. We cannot agree to that. We agreed that the new health minister will carry out a sustainability analysis and present the results to the government," the SDE politician said.
"I was offered a place in the government, but I declined," Ossinovski revealed.
The matter of what to do with small schools was debated for ten hours, and there were plenty of differences. "We have agreed there will be additional funding and a change in regulation governing the obligation to provide education close to home. The important part therein is that grades one through six need to be inside a 60-minute ride from home."
Editor: Mari Peegel, Marcus Turovski