Ministry of Finance wants to hamper import of old cars

Evelyn Liivamägi.
Evelyn Liivamägi. Source: Arp Müller/ERR

The draft car tax, which is now being approved by the Ministry of Finance, could be changed to remove the section in which the charge for first registration is is determined by the age of the vehicle. So importing old cars into Estonia would become impractical.

Evelyn Liivamägi, deputy secretary general for financial and tax policy at the Ministry of Finance, told Arp Müller in "Reporteritund" that the ministry had initially planned to prevent the import of older and more polluting vehicles into Estonia by means of environmental legislation, but now it seems that this will not be the case.

"Perhaps we need to address this with a car tax instead. This could mean that the age component of the registration fee would be removed, which in turn means that sometimes the registration fee for an older car can be very high compared to the value of the car itself. But it would at least help us from that corner, so that those old cars that nobody wants anywhere else in Europe can't be registered cheaply in Estonia," Liivamägi said.

Referring to a letter from the Estonian Leasing Association calling on the Ministry of Finance to abandon the age component and stating that the taxation of vehicles should not be a national social project, Müller asked whether the Ministry of Finance was also planning to abandon the age component in the annual tax.

Liivamägi said she does not support the abolition of the age component in the annual tax.

"In the context of the annual tax, I disagree because the tax still has to be designed so that people have the ability to pay it. And I would argue that today people don't drive an old car because it's cool, generally people drive an old car if they don't have the money to buy a new car," Liivamägi said.

"It's also not fair to start taxing people just because they can't afford a new car," she added.

At the beginning of October, the Ministry of Finance published a draft proposal for a car tax that would introduce a car tax so that heavier and more polluting cars would pay more. The tax would be paid both annually and when the car is first registered in Estonia. The amount to be paid would decrease over time, reaching its lowest level for cars 20 years old.

Under the bill, the state would begin collecting the tax in 2025. In the first full year, the state expects to collect about €230 million from the tax. The annual tax will be due by October 1 each year, paid by the owner or lessee of the vehicle and administered by the Tax and Customs Administration.


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Editor: Arp Müller, Huko Aaspõllu, Kristina Kersa

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