Mayor: Tallinn not planning to raise land tax for private individuals

Tallinn and the surrounding municipalities are not preparing to suddenly raise land tax for private individuals from 2026, officials say.
Last week the government sent amendments to the Land Tax Act to the Riigikogu for discussion. The changes will allow local municipalities to set the rate and annual increases.
Mayor of Tallinn Jevgeni Ossinovski (SDE) told ERR the coalition has agreed land tax will not rise for residents in 2025.
"Decisions for 2026 will be taken next year, but we are not planning any additional revenue from land tax at this stage," said Ossinovski.
Mayor of Viimsi Illar Lemetti (Reform) said land tax amounts to 4.8 percent of the municipality's income but cuts from the so-called Robin Hood tax will reduce its revenue.
"The land tax issue can also be seen in a broader context. There is also a debate on whether the share of the personal income tax received by the municipality should be redistributed. There have been changes in the country regarding land tax. In this year's budget, land tax in Viimsi is forecast to be 12.5 percent less than last year. This is related to a change made by the state: while on the one hand it is said that the land tax rate has increased by more than eight times, this is not the case for all land uses, for example, for productive land it has decreased. We are waiting for compensation from the State, which has been promised," Lemetti said.
"If given the opportunity to raise land taxes, we will use the opportunity to reduce the income gap created by the depreciation of productive land. If the state were to reduce the share of the Viimsi municipality's personal income tax as well, we would not cover this with a sharp increase in land tax. There are no plans to raise taxes on private individuals," he added.
Government: Changes primarily affect Tallinn and nearby municipalities
Local governments are highly dependent on central government funding decisions and should have more autonomy, the coalition believes.
"This forces local governments to wait for state funding decisions when making budgets and inhibits long-term planning in organizing local life. Fiscal autonomy at the local government level allows the community to strike a balance between the level of services and the tax contribution. This means that the community can agree what it is willing to pay for the availability or quality of a service," a press release said.
Land tax is Estonia's only property tax and has not changed since 2012. An assessment carried out in 2022, showed values have considerably increased.
So that rapid tax increases did not occur, a limit was applied so that it could not rise by more than 10 percent or €5 a year. However, the restrictions created a situation where, in some places, the amount of tax collected is lower than last year.
The new rules will set the rate increase as a maximum of 1 percent of the taxable price of the land. Areas used for business or commercial purposes will have a cap of 2 percent.
This does not mean rates will rise automatically, as they are set by local governments. The change primarily affects municipalities in Tallinn and its immediate surroundings, which may have more motivation to raise them.
Kokk: a blow to people's sense of security
The government's decision has drawn criticism from opposition parties.
"The regional affairs minister's decision to abolish the nationwide domestic land exemption and sharply increase tax rates for other uses is a blow to people's sense of security," said Isamaa vice-chairman Aivar Kokk.
Andres Kaarmann (Parempoolsed), deputy mayor of Saue, said: "Land tax is not a bad thing in itself. As well as generating revenue to provide quality services to its residents, it also contributes to a more efficient use of land. Greater financial autonomy for local authorities is also very welcome."
"Unfortunately, the land tax system is being changed in a way that does not give the impression of thoughtful action. Given the ever-changing positions of today's government, this practice paves the way for ever more bold delegations of public responsibilities to local authorities, and for saying that you will have to find the money to meet them yourself," he added.
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Editor: Mari Peegel, Mart Linnart, Helen Wright