Budget, Estonia, Financial Services, Markets and Companies, Taxation

The city of Tallinn has made an unprecedented move and completed the drafting of its 2011 budget already and wants to have it adopted in the course of the next week or two. Opposition factions in the city council state that the city government’s aim is to be ahead of the Riigikogu which is currently processing a legislative amendment to abolish the municipal sales tax that Tallinn introduced only this summer. Namely, if the city manages to adopt its budget, which includes the sales tax revenue, before the parliament abolishes the tax, the city is entitled to ask for a compensation from the state, which according to the opposition’s Pro Patria and Res Publica Union can amount to 250 mln kroons.

The Retailers Association said that rushing the city budget at a time when legislative amendments that will affect it are in parliament proceedings and in short term perspective, is unethical. The law of amendments to the municipal taxes that would abolish the sales tax, has so far passed its first reading in the parliament.

The Association said that responsible behaviour towards city residents and retailers means that it is taken into account and not neglected knowingly. All pretexts about the early adoption of the budget are just to mislead the public, the association says.

The association added that approving the budget four months before the end of the budgetary year also refers to the danger that possible future economic developments have not been evaluated adequately and the final result isn’t realistic.