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Coalition reaches agreement on amendments to tax package

Photo is illustrative.
Photo is illustrative. Source: (Ministry of Finance)

The government coalition, consisting of the Center Party, the Social Democratic Party (SDE) and the Pro Patria and Res Publica Union (IRL), on Thursday evening reached an agreement regarding amendments to the tax package.

Prime Minister Jüri Rata said that the negotiations passed took place in a constructive atmosphere and the coalition partners searched for the best solutions together, government spokespeople told BNS.

"I thank and acknowledge all the coalition parties for their strong team spirit," Ratas said. "Together we decided that we will not cut back on landmark achievements to improve the welfare of the people of Estonia, but will find other financing sources. We will raise the basic exemption for people earning less than the average wage to €500, implement the long-awaited healthcare reform and go on with the national investment program."

As agreed, the government will forgo the previously planned deposit tax, but will restrict tax free transfer to other countries of profit earned in Estonia. The Finance Committee of the Riigikogu and the Ministry of Finance will draw up the necessary amendments to the Income Tax Act, which will enter into force on Jan. 1, 2018.

The government will also not impose an excise duty on packaging, but will analyze the ways how to best organize packaging and waste management in the course of the year and then decide the next steps.

As promised, amendments will be made when it comes to joint tax returns of spouses, which means that the right of spouses to jointly declare income exempt from tax will be restored to its current amount, which is €180 per month.

The implementation of the aforementioned amendments will be covered by the increased payment of social tax thanks to the subsistence benefit reform, more effective use of national public space, bridging the tax gap by more effectively taxing profit earned in Estonia, cutting the state's administrative expenses by 3 percent and not increasing the volume of purchases of land under nature protection. Cuts to the state's administrative costs do not concern constitutional institutions and the jurisdictions of the Ministry of Defence and Ministry of Foreign Affairs.

Editor: Aili Vahtla

Source: BNS

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