Estonia 200 suggest progressive income tax, VAT

Members of Estonia 200 party
Members of Estonia 200 party

The non-parliamentary party Estonia 200 is suggesting that the country's current tax system be fundamentally reviewed and that progressive income tax and value added tax (VAT) be introduced in Estonia.

"All the principles on which taxes today are based should be reviewed," the party said in a statement. "Thirty years is a long enough time to make a proper inventory of the system."

Estonia 200 is to make a proposal to the government to first consider the implementation of a progressive VAT and link the VAT rate to the ecological footprint of goods and services. "Progressive VAT will allow people to favor goods from near their home because, as a rule, their ecological footprint will be smaller," the party said.

According to Estonia 200, labor taxes also need thorough repair. "The burden on the employer to pay taxes must be reduced and the responsibility of the employee increased. The payment of a certain portion of the social tax must be made the responsibility of the employee. Ideally, the rate of the health insurance portion of social tax contributions should depend on the employee's health behavior," the party said.

Thirdly, Estonia 200 suggests that in addition to the amount of income, the progressive nature of income tax must also take into account the age of the payer. The party estimates that the income tax rate should be lower for young people and retirement-age workers. "Such a tax system relieves the heavy tax burden currently on the workforce and helps young people and the elderly stay on the labor market. It also keeps young people working in Estonia rather than encouraging them to work abroad," the party said.

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Editor: Marcus Turovski

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