Economics, Estonia, Financial Services, Taxation

"My position is that if I did not promulgate this law I would interfere in fiscal policy to an extent to which I have no right under the Constitution," the president said in a press release.

The president said she signed the bill of tax amendments into law despite the circumstances of its adoption with which she cannot be satisfied in any way and that she regards it as her duty to draw attention to the problems concerning the handling of the bill.

According to Kaljulaid, a direct result of not promulgating the amendments would be the inconsistency of the 2017 state budget adopted on Dec. 19 with the State Budget Act which prescribes the budget's structural balance. "I thus would have to not promulgate the said law as well and Estonia would start the new year without a state budget," she said.

Kaljulaid said she asked the chancellor of justice on Friday to analyze if necessary specific aspects of the tax law that might put a question mark over its compliance with the Constitution and other laws. Unlike the president of the republic, the chancellor of justice can contest single provisions of a law and the questions related to its handling. "The chancellor of justice and I agree that such a procedure – a law is promulgated by the president and the chancellor of justice uses the possibilities granted to him or her by law to check its conformity with the Constitution – is a sensible and sustainable solution. Nonetheless, the emerged situation is regrettable," the president said.

The parliament on Monday passed the new ruling coalition's bundle of amendments to the Income Tax Act and Social Tax Act which among other things cancel a cut in the social tax rate planned for the next year, accelerate excise duty hikes and introduce a new system of income tax exemptions beginning in 2018.

The Estonian Chamber of Commerce and Industry on Tuesday asked the president to not sign the bill into law, arguing that the cancellation of the social tax rate cut at such short notice was in conflict with the six-month advance notification rule contained in the Taxation Act.