Estonia, Legislation

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Riigikogu mulls increasing income tax free minimum in Estonia

BC, Tallinn, 21.08.2013.Print version
All Riigikogu parties are on the common opinion that income tax free minimum, i.e. the income on which income tax doesn’t have to be paid, should be increased in the near future while opinions differ on how much and where the financing should come from, Public Broadcasting reports.

Although the coalition agreement prescribes cutting income tax by 1 percent starting 2015, opposition parties think that this plan should be abandoned in the name of increasing income tax free minimum, reported LETA.

Banker and entrepreneur Indrek Neivelt proposed at the Opinions Festival in Paide last week that the income tax free minimum should be raised from 144 euros a month to the level of minimum wage, i.e. 320 euros a month. He proposed restoring corporate income tax, introducing property tax and raising income tax as the ways to cover the holes in the state budget.

Coalition parties have reached an in principle consensus that the income tax free minimum has to be increased but haven’t yet reached an agreement on how much.

"Minimum wage could be the level we could aspire for. Pro Patria and Res Publica Union (PRU) has even said that the income tax free minimum could reach up to 500 euros," said Riigikogu finance committee chairman Sven Sester (PRU).

Reform Party MP, member of the committee Aivar Sõerd said that such a step is not very realistic. "The need for raising the income tax free minimum exists though. This would also be a step among the measures that lower the salary taxes burden," he said.

Sester said that the possible increase should be financed from possible economic growth, not playing with other taxes.

The matter will have to be decided upon the next few months when the state budget for the next year will be compiled.


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