Updated car tax passed the second reading in the Riigikogu

NordenBladet —

At the beginning of the sitting, Hele Everaus took the oath of office. She became a Member of the Riigikogu, replacing Raimond Tamm. Minister of Defence Hanno Pevkur also took the oath of office before the Riigikogu.

Two Bills passed the second reading

The Riigikogu first passed the Motor Vehicle Tax Bill (364 UA),  initiated by the Government, on 12 June. The President of the Republic refused to promulgate the Act on 25 June on account of its provisions violating the principle of equal treatment. On 15 July, the Riigikogu decided not to pass the Act again without amendments and set the deadline for submission of motions to amend the Act as 19 July.

374 motions to amend the Bill had been submitted by deadline. The Finance Committee had consolidated them into 30 motions to amend and the Finance Committee in its turn had made three amendments to the Bill. According to the amendments, instead of the tax exemptions planned earlier, targeted support measures will be provided for vehicles converted or adapted for disabled people.

According to the Bill, a number of allowances for people with disabilities will increase and the state’s participation in the acquisition of technical aids will increase. In addition, there are plans to pay a one-off benefit to people with disabilities to mitigate the impact of the delay between the entry into force of the car tax and the amendment to the Social Benefits for Disabled Persons Act. According to the Bill, the Act enters into force on 1 January, while the monthly allowances for people with disabilities and the provisions concerning technical aids are proposed to come into force in June 2025.

Under the Bill, the social benefit for disabled people will be paid monthly to people with a moderate, severe or profound disability to partially compensate for additional costs due to their disability. According to a motion to amend, the allowances for children and working-age people with a severe or profound disability will be increased, and the allowance for working-age people with a severe or profound disability will be harmonised to a fixed amount (the allowance will no longer depend on the type of disability). This will ensure people with disabilities an important additional support in their monthly budget. At the same time, the disability allowance for children and working-age people with a moderate disability and the disability allowances for people of old-age pension age will be rounded upwards. The amendment will concern all children and working-age people with a severe or profound disability.

The amendment is planned to increase the allowances for children with a severe or profound disability to €180 and €270 respectively, which will bring families with disabled children an additional monthly allowance of €18.91 and €28.36. In addition, the allowance for working-age people with a profound disability will be increased to €100, which will ensure them an extra €46.3–56.53 per month. The allowance for working-age people with a severe disability will be harmonised at €50, allowing them an additional allowance of €0.91-15.22 per month.

There are also plans to pay a one-off disability allowance to children and working-age people with a severe or profound disability in 2025 to compensate for the costs added by the motor vehicle tax before the Act on the increase in disability allowances comes into force.

The amendment also provides that, in the future, the state will provide a discount for technical aids regardless of the degree of severity of disability or reduced capacity for work. As a result of the amendment, in no age group will the entitlement to obtaining a technical aid with a discount from the state be based on the degree of severity of disability identified or the reduced capacity for work as assessed by the Estonian Unemployment Insurance Fund. In the future, the discount will be based on the person’s actual need for a technical aid which will be determined by a specialist who will issue a certificate for the technical aid.

For children under the age of 18, the amendment will mean that the state will reimburse the cost of a technical aid within a threshold of 90% to all children who are identified as needing a technical aid. The state will reimburse the cost of a technical aid to the extent of 40–90% according to the list of technical aids on a means-tested basis to all working-age people who are identified as needing a technical aid.

The Bill will establish a motor vehicle tax in Estonia which will consist of a component to be paid every year by motor vehicle owners on vehicles registered in the motor register and a component formed by the motor vehicle registration fee which will have to be paid upon the registration of passenger cars and vans in the motor register. The purpose of the motor vehicle tax will be to direct people to use less polluting vehicles and to support the use of old cars until the end of their useful life.

During the debate, Martin Helme, Helle-Moonika Helme, Rain Epler, Kert Kingo, Mart Helme, Rene Kokk, Anti Poolamets, Siim Pohlak and Arvo Aller from the Estonian Conservative People’s Party Group; Andrei Korobeinik, Aleksandr Tšaplõgin, Aleksei Jevgrafov and Vadim Belobrovtsev from the Estonian Centre Party Parliamentary Group; Anti Allas from the Social Democratic Party Group and Andres Metsoja, Urmas Reinsalu, Helir-Valdor Seeder, Mart Maastik, Aivar Kokk, Riina Solman, Priit Sibul and Tõnis Lukas from Isamaa Parliamentary Group took the floor. Non-attached Members of the Riigikogu Kalle Grünthal, Jaanus Karilaid and Jaak Valge also took the floor during the debate.

Isamaa Parliamentary Group and the Estonian Conservative People’s Party Parliamentary Group moved to suspend the second reading of the Bill. The plenary did not support the motion. 28 members of the Riigikogu were in favour of the motion and 54 were against.

Bill on Amendments to the Income Tax Act

The Bill on Amendments to the Income Tax Act (443 SE), initiated by the Government, will amend the principles for the allocation of income tax to local governments. Starting in 2025, the share of the income tax paid to municipalities on pension income will be increased and the share paid on other income will be reduced gradually over three years, so that they will be equal at 10.23 percent by 2027. Currently, municipalities receive income tax to the extent of 2.5 percent on pension income and 11.89 percent on other income of natural persons.

The Bill aims to reduce regional underdevelopment and urban sprawl. The amendment will accelerate the growth of income tax receipts in municipalities with a high share of elderly people and slow it down in municipalities with a higher share of working-age population and higher salary levels. The total revenue base of local governments remains unchanged under the Bill.

During the debate, Aivar Kokk, Helir-Valdor Seeder and Andres Metsoja from Isamaa Parliamentary Group, Vadim Belobrovtsev from the Estonian Centre Party Parliamentary Group and Rain Epler from the Estonian Conservative People’s Party Parliamentary Group took the floor.

Isamaa Parliamentary Group moved to suspend the second reading of the Bill. The motion was not supported. 13 members of the Riigikogu were in favour of the motion and 55 were against.

The third reading of both the Motor Vehicle Tax Act and the Act on Amendments to the Income Tax Act will take place one hour after the end of the first extraordinary sitting today.

The sitting ended at 4.34 p.m.

Verbatim record of the sitting (in Estonian)

Video recording will be available to watch later on the Riigikogu YouTube channel.

Riigikogu Press Service
Maiki Vaikla
+372 631 6456, +372 5666 9508
maiki.vaikla@riigikogu.ee
Questions: press@riigikogu.ee

Link uudisele: Updated car tax passed the second reading in the Riigikogu

Source: Parliament of Estonia