Economy minister: We want to get unpleasant decisions made quickly

Tiit Riisalo.
Tiit Riisalo. Source: Priit Mürk/ERR

The government is planning to bring all tax changes together in one bill and send it off to the Riigikogu to make rapid progress on difficult and unpleasant fiscal decisions, Tiit Riisalo, Estonia's economic affairs and IT minister, said on the "Esimene stuudio" talk show.

While the government planned to approve and forward to the parliament Estonia's upcoming tax changes on Thursday, this did not make the agenda in the end. Minister of Economic Affairs and IT Tiit Riisalo (Eesti 200) said that more time was needed "to put together the tax package," with corresponding decisions to be made Monday.

Asked whether all tax changes – laws to be amended include the Income Tax Act, Defense Forces Service Act, VAT Act, Gambling Act, and the Alcohol, Tobacco, Motor Fuel and Electricity Excise Duties Act – will be lumped together in a single so-called cluster bill and tied to a vote of confidence in the government, Riisalo confirmed as much.

"There is a political logic to this. We want to make swift progress with difficult and unpleasant fiscal decisions. It is also a case of the sooner we make the final decisions, the more time left for preparation," he said.

Even though the minister suggested that the tax hikes bill can be further discussed in the Riigikogu and additional analyses commissioned, "Esimene stuudio" host Mirko Ojakivi said that a confidence vote would not see the parliament vote on motions to amend.

"That's the short of it, yes," Riisalo conceded.

The practice of passing so-called cluster bills in the Riigikogu has been criticized by several presidents and the justice chancellor in Estonia. Riisalo agreed that it is not the best way to govern.

"Definitely. But we are talking about a package of tax bills here. We are treating with tax and fiscal matters inside a single package. We are not talking economy and culture in the same bill. Rather, we should be critical of cluster bills that try to lump different things in together merely for the sake of convenience," the minister remarked.

Riisalo said that his ministry approved the bills because "the government works as a collective." "We decided during coalition that this would be the government's fiscal policy."

The tax bills have been met with criticism from local governments and businesses, with the plan to abolish the special 9-percent VAT rate of accommodation providers among the more unpopular decisions. The general VAT rate is set to be hiked from 20 percent to 22 percent.

Riisalo admitted that analysis is in order to make sure tax changes do not end up reducing revenue instead.

"Tourism is something of a special sector of the economy. It is part of export and also connected to other sectors," the economy minister said, adding that more thorough modelling is needed to make sure the changes won't end up hurting tax receipt in the end.

Riisalo said it is possible to take a time-out regarding this particular measure in the Riigikogu and ask for additional expert opinions.


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Editor: Marcus Turovski

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