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Car tax will be higher than the initial proposal

Cars in Tallinn.
Cars in Tallinn. Source: Siim Lõvi/ERR

The government postponed the car tax for six months, but the new plans will make it significantly more expensive than the original version. The minister of finance anticipates that the new draft will be completed in the coming weeks and could reach parliament in November.

According to earlier plans, the car tax was to go into effect in July of next year. However, when it was time to put together the budget for next year, the government decided that the tax would not go into effect until 2025 because there was not enough time for a coordination round.

he calculations presented to the public by the Finance Ministry in the summer can be now ignored, as the new target is to generate €200 million a year instead of €120 million.

"The formula will differ as will the amounts; we now see that the potential revenue in 2025 could be €200 million a year. What I can say is that it is CO2-based, i.e. emissions-based, and that it is based on the registration tax as an annual tax, with a mass component included," Finance Minister Mart Võrklaev (Reform) said.

The new draft will be ready soon, and Võrklaev expects it to be approved by the end of the year.

"We are still finishing drafts, analyzing them, and will have the final version out in a few weeks. We'll hold this public debate on the draft for, I believe, two or three weeks so that the public can weigh in. We should be able to provide the analysis to the Riigikogu sometime in November. And then implement it early in the year," the finance minister said.

Both the Social Democrats and the Eesti 200 confirm that they will continue to support the car tax, but that the original version has to be amended.

"We think that it is critical to reinforce the luxury car component of this tax," Jevgeni Ossinovski, chair of the SDE faction, said.

"The coalition has agreed on the implementation of a car tax. When we look at the wider picture, the climate aims, and the fact that Estonia has essentially no property tax, so the car tax is a subset of the property tax. And, because we understand the importance of revenue for the budget, we will continue to support this tax; however, it is critical for us that it is more egalitarian," Ossinovski said.

For the Eesti 200, the car tax has always been more of an environmental tax.

"The more you pollute, the higher your bill will be. These solutions are now being discussed and calculated at the Ministry of Finance. We'll meet again on Monday next week to go through these figures again," Toomas Uibo, chair of the Eesti 200 group, said.

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Editor: Barbara Oja, Kristina Kersa

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