Last week, the news broke in Estonia that on top of other planned taxes, a congestion tax is in the works as well. Delfi wrote (link in Estonian) that Michal's cabinet is "cooking up yet another tax burden for car owners."

Government representatives denied the plan and expressed their surprise and even displeasure.

Speaking to ERR on Monday, Minister of Regional Affairs and Agriculture Piret Hartman (SDE) said that she had not requested the ministry to explore the introduction of a congestion tax, and that the proposal for one came from a local government.

ERR, however, obtained a letter in which Kerli Ojakivi, an adviser at the ministry's Local Government Policy Department, wrote to a local government on August 6 that "We are planning on proposing a congestion tax as well to the minister, as a way to increase local governments' revenue base. Would you be able to tell me how high traffic density is in [...] so we can make the initial calculations?"

When ERR asked Ojakivi to provide clarification on where the idea to pursue a congestion tax came from, she declined to explain and instead referred them to the ministry's Public Relations Department.

Hartman explained that a congestion tax first started being discussed within the Ministry of Regional Affairs this spring.

"We discussed wanting to increase local governments' financial autonomy," she recalled. "As part of this, we took a look at the Land Tax Act and the Income Tax Act, and it was also agreed then that we would also review other possible measures for achieving this. For example, we also spoke at the time of a tourist tax, considering various taxes that could increase the revenue of local governments."

Following this, the Ministry of Regional Affairs started working together with local governments and asked them for suggestions on how to boost financial autonomy, she continued.

"Then we received a letter from a local government proposing that one possible solution could also be the introduction of a congestion tax," Hartman said. "Our response from the ministry was to request additional data on the topic."

She emphasized that this was part of routine information exchange between officials.

Hartman: This tax wouldn't be imposed by government

"If, after these preparations, local governments and also we ourselves find it reasonable, then it certainly wouldn't be a tax imposed by the government in any way, but rather a matter of local governments' own discretion and competence," the minister emphasized.

She added that the ministry hasn't reached the point of a congestion tax being a viable option, which is exactly why preliminary work with local governments has been happening at the official level.

"We haven't gotten that far yet; right now it's more about gathering information and analysis," Hartman noted.

She also mentioned that she had not been aware of the information exchange that had taken place between the officials.

"Of course I was aware that the government made that decision and that work on it had begun within the ministry, but I had not asked anyone to look into a congestion tax," Hartman explained.

"I truly was not aware of the correspondence that had taken place between officials at the time, because, understandably, there are nearly 300 people working in this [ministry] and I don't review all correspondence," the regional affairs minister said.

"This also wasn't correspondence that went out signed by the minister; it was correspondence between officials, which the officials also assumed was for official, internal use," she added.

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