While the coalition agreement of the Reform Party, Eesti 200 and SDE prescribes a car tax from next summer, the details of the new instrument remain unclear. Representatives of the coalition have suggested it is expected to hold €120 million for the state budget.

The M and N categories cover cars, buses, trucks and all-terrain vehicles, such as snowmobiles and ATVs.

Public sector vehicles will also be subject to the tax. "Yes, the state's fleet will also have to be taxed, at least on the level of passenger cars, as everyone must be treated equally. If people need to tighten their belts, the government needs to set an example," Võrklaev said.

While there will likely be exceptions, possibly for Estonian Defense Forces vehicles, the details have not been discussed yet.

Võrklaev suggested that designing the new tax from scratch will take until the end of 2023.

Representatives of the coalition have also said the annual tax would depend on the vehicle's CO2 emissions and price. The future finance minister said that the details of how to tax more expensive cars are being analyzed and could also include pricier EVs.

Data on number of vehicles inconsistent

Data from the Transport Administration suggests Estonia has 653,000 registered M1 or M1G category vehicles, which cover passenger and off road vehicles.

Another 328,000 vehicles belonging to other categories have been registered.

The Estonian Motor Insurance Bureau's data puts the number of M1 and M1G vehicles with insurance coverage at 570,000 for the annual average.

Estonia currently only has a tax for heavy trucks with a minimum authorized weight or gross vehicle weight of 12 tons, which also includes road trains.

The heavy truck tax is due quarterly, with €930 charged annually for the heaviest 40-ton trucks, while the average payment is around €200.

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