Six local governments hike land tax to maximum extent this year

This year, six of Estonia's 79 local governments raised land taxes to the maximum allowable limit, citing last year's drop in land tax revenues following a reassessment of land values.
The municipalities of Haljala, Jõelähtme, Lääneranna and Vormsi as well as the cities of Maardu and Loksa raised land taxes to the greatest extent possible this year. Another eight local governments, meanwhile, deemed it possible to lower the tax.
"There are 79 local governments in Estonia, and 44 have kept their land tax rates unchanged from last year," notex Riita Parksepp, a service director at the Income Tax Department of the Estonian Tax and Customs Board (MTA). "Only six raised the rate to the maximum extent."
These tax increases are in part helping local governments compensate for reduced land tax revenues following a reassessment of land values.
"After the land valuation reform, we lost nearly €500,000 in revenue," acknowledged Maardu Mayor Aurika Sin-Kerra. "This [increase] is essentially a recovery — we're returning to 2023 numbers."
She added that it was a necessary step for the continued development of the city, "allowing us to invest more in infrastructure and improve the lives of our residents."
"Before the land reassessment, we collected €330,000 annually," recalled Haljala Municipal Mayor Anti Puusepp. "With the new valuations, our tax revenue fell by 10 percent, to €300,000. This year, we expect to collect €440,000."
Puusepp noted that Haljala Municipality is home to a large number of cottages and summer homes. "Their owners are registered residents of Tallinn, Tartu or Rakvere, so they don't contribute to supporting local life with their taxes," he said.
Across the country, Estonia's land tax revenues totaled approximately €59 million last year. This year, these tax revenues are expected to go up significantly.
"According to current forecasts, land tax revenues for 2025 across all local governments will be around €82 million," Parksepp said. "The exact figure will be revealed in three weeks' time."
Another land tax hike may be on the horizon next year as well, however. While land tax hikes were capped at 50 percent this year, next year's cap could be significantly higher.
"In 2025, the maximum allowable land tax increase may range from 10-100 percent," the MTA official stated. "Local governments will decide on this by fall."
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Editor: Merili Nael, Aili Vahtla