On Monday, the Estonian Ministry of Finance presented a draft of the much-discussed car tax bill. According to the draft, the both new and second-hand vehicles in Estonia will be subject to an initial registration fee consisting of a €300 basic component as well as additional CO2 and gross weight components.

Mait Kalamees told ERR that he believes these amounts certainly seem too high for consumers at the moment. Kalamees pointed to an example of a calculation showing that the registration fee for a 2019 Audi Q7 would be over €10,000.

"This is definitely shocking. We didn't think that the fee would be that high. At the beginning, we were talking about different figures," Kalamees said.

Kalamees added that he has not had chance to go through all the details, but when the actual calculations do come in, the more precise impact of the fees will become clear. For the moment, however, the picture for consumers appears to be rather bleak, with the changes introduced certainly set to have an impact on the market.

Kalamees said that used car prices are currently on the decline, however they are likely to rise in the future. In his view, consumers, who may be buying more expensive cars today, will opt for smaller and cheaper cars. He also expects that people who have postponed swapping their vehicles up to now, will do so before the new tax comes into force.

Kalamees explained that there have been plenty of ups and downs on the market over the last two years in connection with the chip shortage.

"If this tax comes in as it is, then those who have planned to, will definitely make a purchase next year," Kalamees said, noting that more active sales activity now will come at the expense of the subsequent period. He therefore expects 2025 to be quieter.

According to Kalamees, rising interest rates have led the market into a rather despondent state, with people eagerly awaiting further information on the car tax. There is also a major VAT increase on the way in the near future.

"As Estonia has not previously had a car tax, looking at the numbers at the moment, and I haven't really delved into it, it still seems pretty tough. All the taxes are being raised, and this is causing frustration and resentment among consumers," Kalamees said.

According to government plans, the car tax and registration fee are both due to come into force in 2025.

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