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Employers' manifesto: Tax hikes must be stopped

Euros. Source: (Benoit Tessier/Illustration/Reuters/Scanpix)

In its newly released manifesto, the Estonian Employers' Confederation (ETK) emphasised the importance of a simple tax system and added that tax increases must be stopped.

Recent years' constant tax amendments have caused confusion and mistrust toward the state among all taxpayers, the manifesto stated. This has destroyed morale and had a negative impact on all of the state's tax receipts. Experimenting with taxes must be stopped.

At that, the ETK found that significant tax amendments have been carried out too lightly. These kinds of developments in the tax system have caused a lot of uncertainty. Uncertainty in the tax environment in turn decreases its attractiveness in the eyes of investors, which in turn delivers a blow to economic development and welfare growth.

"We suggest that the next government take time to calmly think through whether the Estonian tax system needs more fundamental amendments, considering the decrease in our working-age population, the need to support innovation, and international competitiveness," the employers said. "The improved involvement of interest groups and analysis-based legislation also increases trust."

The ETK found that a uniform income tax exemption should be restored and excise duty rates be lowered to such a level that excise duty goods are once again bought from Estonia and not from neighbouring countries. In addition, the employers believe that the social tax minimum should be lowered so that part-time employees could find work more easily and a social tax ceiling should be implemented with the objective of making Estonia more attractive for top talents.

At that, the employers said that the payment of social tax should be divided between the employee and the employer so that the net salary of the employee is not reduced and a social tax deduction for the salary of apprentices should be implemented to motivate cooperation between employers and educational institutions.

At the same time, the manifesto also referred to the fact that the state must prepare for worse times for the state budget. "If they do not prepare for worse times in advance, it may bring along sudden tax hikes, the underfunding of public services or the inability to sustainably provide those services," the manifesto warned.

The employers proposed that the state establish a strategy for the decrease in EU funding and prepare for a possible recession, including increasing reserves at the peak of economic growth, develop financial discipline for worse times and carry out the state's largest infrastructure investments when the state of the economy worsens.

In addition, the ETK suggested that a state budget be compiled from a zero base every ten years, that is no taking into account expenses made in the past. Employers are suggesting that the first such budget be drawn up within the next four years, but not later than at the time of the recession.

Editor: Aili Vahtla

Source: BNS

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