58 percent of pensioners gain income due to tax reform, says prime minister

Prime Minister Jüri Ratas (Center).
Prime Minister Jüri Ratas (Center). Source: (Siim Lõvi/ERR)

Prime Minister Jüri Ratas (Center) said on Thursday that as of Jan. 5, 58 percent of all of Estonia's pensioners had gained income due to the recent income tax reform.

Ratas told ERR's Terevisioon breakfast TV program on Thursday that he has seen the first survey by the Social Insurance Board since the changes to the tax-free salary amounts entered into effect at the beginning of the month.

"Where the initial opinion was that some 42 percent of today's pensioners would earn more, the most recent data shows that 58 are earning more, nothing has changed for 25 percent, and that 17 percent have had to contribute more," Ratas said.

With the tax system change that entered into effect on Jan. 1, the state is now changing the tax-free salary according to the gross income of any individual. Incomes below €1,200 gross have a tax-free share of €500, incomes from €1,201 to €2,099 get their tax-free share calculated according to a specific formula (click here for more information), and incomes of €2,100 or more are granted no tax-free share anymore at all.

The data is preliminary, a first more comprehensive analysis will be available at the end of January, Ratas said.

Not all of the country's pensioners have submitted their application for the tax-free minimum on their pensions. In fact, 68,000 of them have done so through their employers, Ratas pointed out.

"One of the basic ideas of the income tax reform was to increase society's coherence and solidarity, and we see that people with low or average incomes have been a problem in Estonia, as they are earning too little," he added.

Editor: Dario Cavegn

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