Ministry seeking solution to law affecting some new mothers' benefits ({{commentsTotal}})

Source: Reuters/Scanpix

A gap created by the Income Tax Act being amended last year has saddled women to receive maternity benefits in a lump sum at the end of the year with an obligation to pay additional taxes. One possible solution the Ministry of Finance is considering would involve making changes to the Health Insurance Act.

Daily Postimees wrote on Thursday that in amending the Income Tax Act, not a single member of the Finance Committee of the Riigikogu had realised that if women who go on maternity leave at the end of the year are paid out months' worth of maternity benefits in a lump sum, based on their income tax return, they end up owing the state taxes.

ERR contacted the Ministry of Finance, which authored the bill, to ask about what solutions are being considered to compensate this legislative lapse, and whether the state plans on doing anything regarding those women already affected by this tax obligation.

Siiri Suutre of the Ministry of Finance's Public Relations Department said that according to current legislation, maternity benefits for a period of 140 days are paid out in a lump sum.

"This means that everyone who was paid maternity benefits at the end of 2018 will not receive any income at the beginning of 2019," she explained. "At the same time, they will retain the right to use these months' income tax exemptions throughout the year. In other words, when filing taxes, it will be possible to apply the income tax exemptions from months during which a taxpayer received no income to one's entire 2019 income."

Maternity benefits are required by the Health Insurance Act to be paid out in a lump sum, but the latter is set to change in the future.

"On 1 April 2022, changes to the Health Insurance Act and the Family Benefits Act will enter into force according to which the Estonian National Social Insurance Board will begin paying out maternity benefits on a monthly basis," Ms Suutre cited as a solution. "We will be submitting a proposal to the Ministry of Social Affairs to amend the Health Insurance Act so that payouts can be divided up even sooner."

The handling of the Income Tax Act in the Riigikogu had been led by the Finance Committee, but ERR was unable to get in touch with committee chairman Mihhail Stalnuhhin on Thursday.

Mr Stalnuhhin told Postimees, however, that he would try to address the issue ahead of the upcoming elections already.

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Editor: Aili Vahtla



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