Bills amending Acts concerning taxes passed the first reading in the Riigikogu

The Bill on Amendments to the Alcohol, Tobacco, Fuel and Electricity Excise Duty Act and the Act on Amendments to the Alcohol, Tobacco, Fuel and Electricity Excise Duty Act and Other Acts (145 SE), initiated by the Government, passed the first reading. According to it, the excise duty rates on alcohol and tobacco products will be raised in order to increase excise revenue and to influence the availability of alcohol and tobacco products.

According to the Bill, alcohol excise duty which was last raised in 2018 will rise by five per cent per year in 2024–2026. The excise duty on cigarettes and smoking tobacco has been raised by five per cent per year in recent years, and an equally high rise is planned for 2024–2026. According to the Bill, the excise duty on tobacco liquids will also rise by five per cent per year over the next three years, and the minimum amount of excise duty paid in the case of cigarillos will grow to the same extent.

With a view to supporting the competitiveness of Estonian agricultural producers, according to the Bill, the planned rises in the excise duties on diesel fuel for specific purposes planned for 2024–2027 will be cancelled which means that the rate of excise duty on diesel fuel for specific purposes will remain at 21 euro per 1,000 litres.

During the debate, Tanel Kiik from the Centre Party Group, Aivar Sõerd from the Reform Party Group, Martin Helme from the Estonian Conservative People’s Party Group and Mart Maastik from Isamaa Parliamentary Group took the floor.

Isamaa Parliamentary Group and the Estonian Conservative People’s Party Group moved to reject the Bill at the first reading, but the plenary did not support the motion. 21 members of the Riigikogu supported the rejection but 54 voted against it.

The Bill on Amendments to the Gambling Tax Act (146 SE), initiated by the Government, passed the first reading. It will raise the tax rates on various types of gambling games in order to increase the state budget revenue.

The current five-per cent tax rate for remote gambling and toto will be raised in two stages according to the Bill: the tax rate will rise to six per cent in 2024 and to seven per cent in 2026. Under the Bill, the tax rate for lottery and commercial lottery will rise from 18 to 22 per cent from 2024. According to the explanatory memorandum, the rise in tax rates is planned in such a manner that it would not have a significant impact on market participants and would not bring about a need to make fundamental reorganisations in the gambling sector.

Siim Pohlak from the Estonian Conservative People’s Party Faction took the floor during the debate.

Isamaa Parliamentary Group and the Estonian Conservative People’s Party Group moved to reject the Bill at the first reading, but the motion was not supported. 19 members of the Riigikogu supported the rejection of the Bill but 53 voted against.

The Bill on Amendments to the Value Added Tax Act (147 SE), initiated by the Government, passed the first reading. According to it, the VAT rate will rise from 20 to 22 per cent from 1 January 2024. In addition, under the Bill, the current nine-per cent reduced rate for accommodation will be repealed from 1 January 2025 which means that the VAT rate for accommodation will also be 22 per cent.

According to the explanatory memorandum, the main purpose of the amendments is to move towards a balanced state budget through increasing the receipt of state revenue. Another purpose is to make the tax system more efficient by reducing VAT derogations.

During the debate, Jaak Aab from the Centre Party Group, Arvo Aller from the Conservative People’s Party Group, Raimond Kaljulaid from the Social Democratic Party Group, Maris Lauri from the Reform Party Group, Igor Taro from Estonia 200 Parliamentary Group and Priit Sibul from Isamaa Parliamentary Group took the floor.

Isamaa Parliamentary Group, the Centre Party Group and the Estonian Conservative People’s Party Group moved to reject the Bill at the first reading, but the Riigikogu did not support the motion. 29 members of the Riigikogu supported the rejection but 54 voted against.

The Bill on Amendments to the Income Tax Act and the Military Service Act (148 SE), initiated by the Government, passed the first reading. Its purpose is to eliminate the costly and ineffective tax incentives, to raise and harmonise the income tax rate and to replace the regressive income tax exemption with a single income tax allowance.

The Bill will eliminate from 2024, in the case of natural persons, the increased basic exemption for people who maintain a child and the increased basic exemption for a spouse, and their right to deduct housing loan interest from their taxable income.

Under the Bill, the income tax rate for natural persons and companies will rise by two percentage points, that is, from 20 to 22 per cent from 2025. At the same time, the 14-per cent reduced rate on the regularly distributed profit of companies will be eliminated and, in connection with this, the seven-per cent income tax withheld on the dividend paid to natural person will also be eliminated.

The Bill will eliminate the regressive income tax exemption and establish a single income tax allowance of 700 euro per month, that is, 8,400 euro per year from 2025. Persons of old-age pension age whose tax allowance is equal to the average old age pension will constitute an exception.

In addition, the Bill will correct the inaccuracies that the European Commission has identified with regard to the transposition of the Anti-Tax Avoidance Directive 2 in the Income Tax Act, in order to avoid infringement proceedings from the European Commission. Also, a technical amendment will be made to the Military Service Act by omitting the reference to the provision to be repealed in the Income Tax Act.

During the debate, Kersti Sarapuu from the Centre Party Group, Priit Sibul from Isamaa Parliamentary Group, Hendrik Johannes Terras from Estonia 200 Parliamentary Group and Rain Epler from the Estonian Conservative People’s Party Parliamentary Group took the floor.

Isamaa Parliamentary Group, the Centre Party Group and the Estonian Conservative People’s Party Group moved to reject the Bill at the first reading, but the motion was not supported. 27 members of the Riigikogu voted for the rejection, but 54 were against it.

The deadline for submission of motions to amend all the four Bills concerning taxes was set as 5.15 p.m. on 31 May.

The Riigikogu made a Statement in support of Ukraine

At Wednesday’s sitting, the Riigikogu passed with 92 votes in favour the Statement of the Riigikogu “In Support of Ukraine’s NATO Membership” (90 AE), submitted by 95 members of the Riigikogu, to support Ukraine’s wish to join NATO as the only way to guarantee a rules-based world order, sustainable peace and the security of European democracies. According to the Statement, the Riigikogu considers it vital to formulate the specific and unambiguous steps necessary for Ukraine’s rapid integration into NATO at the Vilnius Summit, and to grant Ukraine an invitation to join the Alliance.

During the debate, Raimond Kaljulaid from the Social Democratic Party Group, Enn Eesmaa from the Centre Party Group, Peeter Tali from Estonia 200 Parliamentary Group, Urmas Reinsalu from Isamaa Parliamentary Group, Eerik-Niiles Kross from the Reform Party Group and Henn Põlluaas from the Estonian Conservative People’s Party Group took the floor.

In addition, Minister of Social Protection Signe Riisalo replied to the interpellation concerning the reduction of benefits to large families (No. 6), submitted by members of the Riigikogu. During the debate, Riina Solman and Priit Sibul from Isamaa Parliamentary Group and Varro Vooglaid and Leo Kunnas from the Estonian Conservative People’s Party Group took the floor.

Minister Riisalo also replied to the interpellation concerning the means-tested basis of family benefits (No. 8). During the debate, Riina Solman from Isamaa Parliamentary Group and Varro Vooglaid from the Estonian Conservative People’s Party Group took the floor.

The sitting ended at 1.19 a.m.

Verbatim record of the sitting (in Estonian)

The video recording of the sitting will be available to watch later on the Riigikogu YouTube channel. (Please note that the recording will be uploaded with a delay.)

Riigikogu Press Service
Karin Kangro
+372 631 6356, +372 520 0323
karin.kangro@riigikogu.ee
Questions: press@riigikogu.ee

Link uudisele: Bills amending Acts concerning taxes passed the first reading in the Riigikogu

Source: Parliament of Estonia