Finance minister: Car tax aimed at cutting down use, especially in cities

Minister of Finance Mart Võrklaev (Reform).
Minister of Finance Mart Võrklaev (Reform). Source: Siim Lõvi /ERR

With its under-development car tax, the Reform-Eesti 200-SDE government wants to reduce the number of cars on the roads, in urban areas, Finance Minister Mart Võrklaev (Reform) says.

The minister gave an interview to ETV news show "Aktuaalne kaamera" Wednesday, which follows in its entirety.

Astrid Kannel: There are now two variants of the car tax (as proposed-ed.) - A broader variant, and a narrower one. But why are there two at all?  When taking a look at the table of sample calculations, it seems clear to me that under the CO2-based [narrower] option, we would pay less.

Mart Võrklaev: The are two options are there to enable us to hold a debate and discussion, with this point of comparison - whereby, depending on what we take as the basis of the calculation, be it CO2 along or CO2 plus, for instance, the weight component – at the heart of how this tax will be formulated.

The overarching reason we are doing this is to reduce car use, primarily in the towns; to move towards more sustainable mobility, so that our vehicle pool becomes more environmentally friendly, and also to deal with scrap vehicles (including vehicles kept but not used or not roadworthy-ed.). 

In order to fulfill these goals, there are various parameters that may help one way or another to get closer to these goals. We have proposed them in order to discuss them together. This is also the point of this development intention.

Kannel: Many people in Estonia live in the countryside and we have a dispersed population, so a car is a requirement, for them. Which option would save rural people more money?

Võrklaev: We have also dealt with this topic and it works out the same in either case. In fact, we have introduced the age component to the tax, not so much to make a comparison between country and city, but actually to reflect the fact that our people have different purchasing power and abilities to pay.

The assumption being that if a person who drives has a lower income, they most likely have been able to afford a cheaper, and therefore probably older, car.

With both tax system models, we have introduced scope whereby for vehicles aged between five to 15 years, as the car ages, this tax will fall, as the car in question has already made the bulk of its environmental impact via its production, but on the other hand, people with lower incomes, who have older cars and who do not immediately have any options to go and buy a new and more economical car, can still make their necessary trips – regardless of whether they're in town or country.

I would be happy to travel via public transport, especially in winter, but then again there are no buses.  Haven't you considered that if we are talking about having fewer cars on the roads, first of all, it should be made possible to travel by public transport between, for example, Tallinn and Tartu. I do not even need to state that it is no longer possible to travel from Paide to Tallinn, or to Tartu, at 8.30 p.m. But then there would also be fewer cars.

Both things need to be addressed. First of all, we want to cut down on the number of cars in the city, perhaps to make people consider more carefully, do I buy a car or not. But we also need to deal with public transport. The current government has said that it is also dealing with traffic reform, and that these things are being done in parallel. I have been tasked with dealing with the car tax; the regional minister and the climate minister (Madis Kallas and Kristen Michal respectively-ed.) deal with public transport more broadly.

Many people have been telling me that if a car tax meant they could actually see that money going toward repairing the roads, then they would go along with it. Will that be the case, or will it just end up in the "general boiler?"

The more we write revenues and expenses into the state budget, the less space for decision-making space we have, ultimately, as to what is right or necessary for any given government or at any given point in time. 

I think that we have already written off a lot of these state budget expenses for various subsidies and specific measures. 

Perhaps a more reasonable practice would be that yes, we receive taxes and then we decide at that point in time what needs to be done for that money, at that point in time.

But it is clear that one of the priorities for this government is to deal with environmental issues. In addition to taxing cars, i.e. cutting down and making them environmentally friendly, this also includes sustainable modes of movement, be it trains - in a few years' time we will have ten new locomotives – or the construction of tramways, the improvement of public transport etc. We have all this in the works.

How much will you personally be paying for your car tax, and which option do you prefer, as a private citizen?

I haven't fully calculated what it will be. I've already been asked about that today. I also have a "hobby car" entered the register and I already know about the tax. I haven't calculated what the tax on my second car will be, but I'm ready to pay it. /.../ I think that the annual fee will be around €150 for my main car, and for my hobby car, which is 63 years old, I would pay €30. It is also key to know that cars over 20 years old cost €30 per year. This is being done because they are that much older, and due to their own factors.


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Editor: Andrew Whyte, Merili Nael

Source: 'Aktuaalne kaamera'

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