Estonia, EU – Baltic States, Financial Services, Legislation, Taxation, Transport

The idea is consistent with fiscal balance measures envisaged by the Ministry of Finance, which call for 10 million euros in additional revenue to be collected as road user taxes in 2017.

A study commissioned by the Government Office and carried out by Ernst & Young Baltic AS sees the average time based tax payable per road user as 722 euros a year and the cost of a day ticket 12 euros, it appears from the draft presented to the Cabinet.

The survey is in favor of the tax being applied to the entire road network, as partial taxation would result in a negative impact on lower category roads as a result of traffic diverting to these roads.

The survey points out that different EU member states have adopted different road pricing options and that to set out a concrete plan for Estonia additional consultations with the Commission as regards the interpretation of the directive apparently will be necessary. The present calculation is based on the premise that local carriers will able to pay the tax also for one day at a time.

As alternatives, the survey names applying mileage based road user charges for heavy goods vehicles, as well as a car tax collected per year. In the case of the taxation of cars the average annual tax rate would be 117 euros, which would have an extensive impact on households, whereas a mileage based tax would require major investments in building and upkeep of the necessary system.

An increase in outlays by 722 euros per vehicle or altogether 16 million euros would reduce the gross operating margin of Estonian road haulage companies from 12.8% to 11.7%, setting Estonia back two notches among EU member states from place 15 to 17.

On the basis of a EU directive, EU member states must tax heavy trucks weighing 12 tons or more. In Estonia the tax is applied to the minimum extent. Besides Estonia and Finland are the only EU member states that have not impose road user charges on trucks.

A road tax is needed to secure the availability of additional money for the maintenance of roads in view of the prospect that EU funding for roads will be cut substantially from 2020.

If the plan gets the government's nod, the ministry will start drafting the relevant bill.