Justice minister voices criticism of car tax plans

Traffic on Laagna tee in Tallinn's Lasnamäe District.
Traffic on Laagna tee in Tallinn's Lasnamäe District. Source: Ken Mürk/ERR

While the Ministry of Justice recently approved the Ministry of Finance's legislative intent document for a car tax in Estonia, the reply of Minister Kalle Laanet (Reform) included several critical remarks.

The document bearing Laanet's signature reads that the legislative intent presents a car tax as both a goal and the only conceivable solution to problems, leaving aside all alternatives.

"We ask for the goals of the bill to be phrased more clearly and accurately in its explanatory memorandum, keeping in mind that the goals included in the legislative intent are contrary to one another – having more environmentally friendly vehicles would reduce tax revenue, which is why it needs to be clarified how these opposite aims will be achieved."

The Finance Ministry's legislative intent document reads that one of the aims of the new tax is generating tax revenue to be used " to finance various state expenses."

The justice minister asks whether it is justified to use revenue from a tax that largely follows environmental considerations to cover other types of costs.

Laanet also finds that vulnerable social groups, such as large families, people with disabilities and others, should qualify for tax breaks, or if this is not possible, the explanatory memo should give concrete reasons.

The Ministry of Justice points out that taxing defunct vehicles or those that only exist on paper with a CO2-based component would not help achieve the target reduction in CO2 emissions as they do not participate in traffic.

"The information provided in the legislative intent leaves it unclear whether the desired reduction in the total number of vehicles should be achieved mainly through updating registry data, or whether the plan is to physically reduce the number of cars on the road and how realistic the latter goal is."

Further remarks by Joel Kook, adviser at the ministry's legislative drafting service, concern aircraft and boats, information on the taxation of which is not included in the legislative intent document.

Minister of Climate Kristen Michal (Reform) has previously criticized recent car tax plans, saying they would not achieve environmental goals in the proposed form, and that CO2 emissions would have to play a bigger role than vehicle age to achieve that.


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Editor: Urmet Kook, Marcus Turovski

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