Center Party chair: Car tax must be waived or revenue from it directed to those in need

TALLINN – Chairman of the opposition Estonian Center Party Mihhail Kolvart said that the government needs to waive the car tax or else share the revenue from it with local governments who can use it to help people.

"In order for local governments to be able to provide their people with the necessary services and provide them with social protection in difficult times, it is perfectly reasonable for the state upon introducing the motor vehicle tax to share the revenue from it with local governments in a similar way to personal income tax. All the more so if the purpose of the motor vehicle tax is to impose an environmental tax on vehicles. Local governments have a central role in the implementation of climate policy and in the development and maintenance of transport infrastructure," Kolvart said.

He added that at present the clearly perceived goal of the tax is not budget balance or environmental protection, but the fulfillment of the main promise of the Reform Party, that is the restoration of a uniform income tax, the price of which is approximately 500 million euros.

"An increase in VAT, an increase in income tax, the introduction of car tax, the abolition of income tax benefits and termination of free public transport in counties will take thousands of euros from families per year. It is absolutely clear that people with lower incomes, as well as large families and especially the elderly, will be hit the hardest by these decisions," Kolvart said.

According to the chairman of the Center Party, the overall worsening of the economic situation will lead to additional expenses for local governments, especially in the social field.

"The state's vigorous redistribution of money from rich municipalities to poorer ones alone is not enough for municipalities to cope, because the deepening crisis affects all people -- regardless of the size of the municipality. The role of municipalities will be to help those people who get into difficulties due to government policies," he added.

According to Kolvart, the government has clearly expressed the position in the past that municipalities could get additional money from additional taxes and their imposition.

"However, the bill on motor vehicle tax also intends to change the law on local taxes and tax administration, in the course of which, among other things, the autonomy of municipalities will also be reduced. Also, this would eliminate the opportunity for municipalities to decide on the tax themselves and this is already a direct intervention by the state in the self-determination system of the municipality," he added.