Finance minister: Proposed car tax will consider rural-urban differences

Mart Võrklaev.
Mart Võrklaev. Source: Siim Lõvi /ERR

Estonian Minister of Finance Mart Võrklaev (Reform) said, that next week the draft of the proposed car tax will be made public. According to Võrklaev, the draft takes into account that car ownership is a big problem in urban areas, while in rural areas people tend to have older vehicles and cars are often the only way to get around.

"We've done a really thorough job. We have put the draft together in a way that is in line with the best legal practices. We're putting forward different ideas about how to do this and we're looking forward to receiving some active feedback. The hope is that we will introduce the draft in the middle of next week," Võrklaev told ERR.

The minister said that the debate in Estonian society surrounding the car tax has been lively, ever since the new government introduced the idea. He added however, that the draft will be much more concrete and take into account all the ideas that have been put forward in the debate so far.

"We will introduce it, present it and wait for feedback. The aim is to get it to the Riigikogu in the fall, so it is adopted before the end of the year, in-keeping with the agreed timetable. Maybe we will  be able to implement the car tax from the middle of next year, as we said during the coalition negotiations," the minister continued.

Võrklaev confirmed that the main objective of the car tax is to reduce car ownership and address Estonia's environmental objectives.

"And this reduction can largely be taken from the urban environment, so that there will be fewer cars and more economical cars. This is because there are more of alternative forms of transport, and also more pollution, in our urban environment than in the countryside. So, that will continue to be the focus."

Võrklaev added, that from the outset, it has been said, that the car tax will be split into two parts. One part will be paid at the time of registration, while the other will be charged annually.

"Now what the specific amounts are, that I won't really elaborate on until the bill is out. It really depends a lot on what kind of car we are talking about. [And] at what point in time, whether it is being registered or already in use. In any case, the aim is to move in a more sustainable and environmentally-friendly way."

According to the Finance Minister, the draft paper puts forward different options for discussion.

"Perhaps, [the issue of] which parameters to take into account. In particular, to account for the distinction, that the biggest problems related to car pollution are in the urban environment. And since a lot of the debate so far has suggested that in some rural areas cars are essential, while on the other hand the cars there are perhaps somewhat older. How can we also take these parameters into account when designing the tax, so that we don't put people in rural areas who are more car-dependent in a significantly worse position than they are today?"

Võrklaev said he was not concerned that the introduction of a car tax would lead to a mass re-registration of Estonian cars in Latvia.

"As far as I know, there is a car tax in Latvia too, and I have heard from the Latvian Finance Minister that even more luxurious cars with Estonian license plates have been seen there. This is purely based on a conversation between the two of us. Yes, we may not be able to solve this issue of foreign number plates first time around. But we have it marked it down as one of the threats and one of the things that it will be necessary to analyze in the future. However, we don't see mass re-registration as a threat at the moment," Võrklaev said.


Follow ERR News on Facebook and Twitter and never miss an update!

Editor: Michael Cole

Hea lugeja, näeme et kasutate vanemat brauseri versiooni või vähelevinud brauserit.

Parema ja terviklikuma kasutajakogemuse tagamiseks soovitame alla laadida uusim versioon mõnest meie toetatud brauserist: