Ministry: 15.5 percent of planned tax take met in first two months of 2023

Ministry of Finance.
Ministry of Finance. Source: Siim Lõvi/ERR

Tax revenue as set out in the 2023 state budget was met to the extent of 15.5 percent in January and February of this year, the Ministry of Finance says.

As reported by ERR News, a tax revenue of €9.62 million was paid to the Tax and Customs Board (MTA) in February 2023, a rise of 16 percent on year, and mainly income tax-driven.

The Ministry of Finance reports that gambling tax* receipts in the first quarter of 2023 (Q1 2023) were 11 percent higher than the same quarter in 2022, the result mainly of an increase I online gaming.

The issue is significant also in that the incoming Reform-Eesti 200-SDE coalition has said it wants to levy a ban on gambling advertising.

While reports have said that Estonia's overall consumption tax levels may reach the highest in the EU with the incoming government – and are already third highest – the gambling tax aspect of consumption taxes has so far been relatively modest, the ministry says.

Gambling tax receipts reached €47 million in 2022, 0.13 percent of Estonia's GDP.

By comparison, VAT receipts totaled €3.31 billion in 2022, or 9.1 percent of GDP that year – and VAT is also set to be upped by two percentage points, the new coalition says.

The finance ministry also says there have been changes it describes as "interesting", in the gambling tax-related arena, in recent years.

These include the effects of the Covid pandemic, which led to a boon for online gambling firms, for instance.

February 2023 tax take: Wage fund quick facts (source: Ministry of Finance)

  • The average wage increased by 13.1 percent; the number of workplaces, by 1.1 percent.
  • There were 6,800 more workplaces available than in Q1 2022.
  • The growth in the wage fund, which affects labor tax receipts, accelerated to 14.4 percent in February.
  • The wage fund growth was driven most by the energy sector, at 28.7 percent of the total, due to bonus payouts.
  • Education and public administration also had an influence, due to wage increases.
  • Jobs in manufacturing, industry, construction, transportation and storage have fallen.

February 2023 tax take: Income tax, social tax quick facts (source: Ministry of Finance)

  • Social tax payment increased to 14 percent in February compared to last year.
  • Income tax stood at €14 million, or €5 million less than the ame period in 2022.
    A raise in the income tax-free threshold, from €500 to €654 (€704 in the case of old-age pensions) had an effect.
  • Personal income tax take rose by nearly €45 million on year, partly due to a later commencement of income tax rebate payments, totaling €35 million in impact.
  • Over 8,600 people of working age quit the so-called second pillar of the Estonian pension system in January.

February 2023 tax take: Excise duty quick facts (source: Ministry of Finance)

The payment of excise duties in February rose both on the previous month, and in comparison with February 2022

  • Excise duty payments increased by 0.8 percent in February compared with February 2022.
  • Fuel and alcohol excise payments rose, while tobacco excise payments fell – in the latter case by 2.7 percent on year, mainly the result of a 12 percent fall in the volume of cigarettes declared.
  • Payments have been significantly affected by the restoration of an excise duty on vaping liquids, with €1.1 million taken in the first two months of the year.

February 2023 tax take: VAT quick facts (source: Ministry of Finance)

VAT revenue grew significantly in February, though still lagged behind inflation, the ministry says.

  • Trade and construction had the greatest influence on the growth of VAT payments in February.
  • In February, VAT payments increased at the fastest pace of the last six months (15.8 percent), though this still was smaller than rate of inflation over the same period (17.6 percent). 
  • Sales at constant prices nonetheless fell in February, meaning goods and services were purchased at a lower quantity than the same period in 2022.
  • In the case of retail trade, a fall in sales revenue reached the 6 percent level, year-on-year.
  • Payment of VAT on imports fell by 33 percent due to the decrease in the import of sanctioned goods to Russia and Belarus.
  • The incurred VAT debt decreased by €3 million compared to last month, while the number of debtors also decreased. 
  • VAT debt reached €162 million, 1 percent lower than at the same time last year. This also accounts for the largest share of the total tax debt, or 53 percent.
  • In the retail and wholesale trade sectors and in construction, VAT payments rose by 18 and 26 percent, respectively, compared with February 2022. Retail was mostly affected by food and fuels stores, in turn heavily affected by the soaring prices. With construction, the increase in payments arose primarily from growth in sales turnover related to the construction of some key facilities (including road construction and the construction of communication and electricity networks). 

* Gambling tax consists of a total of nine different categories, across what the ministry identifies as three main types of gambling: The state lottery, such as that organized by Eesti Loto; walk-in bricks-and-mortar casinos such as those operated by Olympic or Fenix; online gambling and sports betting. The ministry says that online gambling rose from 10 percent of total consumption to 33 percent, between the eve of the Covid pandemic and the present. Several more foreign firms registered in Estonia during that time – these mainly offer services to players in other jurisdictions. Conversely, the share of the tax-take which derives from traditional, physical casinos has fallen from 51 percent to 32 percent, the ministry says. While the tax take from lotteries has risen in absolute terms, in comparison with pre-Covid times, as a share of the total, this has also fallen, the ministry says.


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Editor: Andrew Whyte

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