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Holsmer: Finance Committee 'in chaos' over proposed tax changes

Remo Holsmer.
Remo Holsmer. Source: (Siim Lõvi /ERR)

The Riigikogu's Finance Committee continued to discuss the government's proposed changes to the Estonian tax system. According to its deputy chairman, Reform Party MP Remo Holsmer, both the bills as well as the committee's agenda have changed substantively again. Holsmer describes the committee as in a state of chaos.

Not even the committee members were able to make sense of all the changes, Holsmer told ERR on Thursday before the meeting, adding that he didn't know what it would bring at all, as nobody knew what would eventually be on the agenda. Things were changing from one hour to the next.

“Nobody can manage to keep up with what exactly is going on there, and certainly not the public. The situation is chaotic, the text [of the bill] is changing, the agenda is changing,” Holsmer said.

The government had crammed a whole range of different issues into its tax package, including the question whether or not a budget deficit should be possible. Principal decisions had been put on the committee's agenda, but the current session of the Riigikogu was coming to a close with just a week left before the summer. Only a single additional meeting had been scheduled, according to Holsmer a very unreasonable speed considering the weight of the issues that needed to be sorted out.

Just days ago the government proposed that certain dairy products could be added to the planned tax on sugary drinks. According to the Ministry of Finance, once the law would enter into effect, the government would then immediately apply for an exception with the European Commission to exempt dairy drinks from the tax. Businesses are uneasy faced with the new tax, and especially with the lack of stability, as nobody could know for sure that the Commission would decide in favor of the government's plan.

According to Holsmer, this confusing situation shows that the government itself doesn't really know what it wants. “The mess surrounding the sugar tax is one thing, the deposit tax another. At this point the Ministry of Finance may have made the proposal to take the deposit tax in its original form out of the bill, but there is no new wording yet.” For the planned excise duty on packaging, the current idea was to settle the matter at a later point. All in all, there were plenty of loose ends, Holsmer said.

In addition, the sugar tax brings along issues that need to be addressed at the European level, as it aims at a select group of producers only and could thus be considered illegal state aid to those not affected by it. As Holsmer points out, it isn't clear when the government's necessary request to be granted an exception by the commission would be decided, and thus it wasn't clear if it would only apply to soft drinks, or to dairy drinks as well.

“All these things should be discussed at a normal speed, not with everything on the table all at the same time,” Holsmer said.

Asked by ERR, the Ministry of Finance said that it was too early to comment on the designated next minister of finance's statement that instead of considering a large number of different tax changes, the government should simply raise value-added tax (VAT). Toomas Tõniste, IRL's designated successor of Sven Sester, had made the statement after his confirmation by IRL's leadership on Wednesday, though Prime Minister Jüri Ratas (Center) said in Thursday's government press conference that the coalition wasn't planning to change Estonia's VAT policy.

Editor: Dario Cavegn

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