Economic development not balanced

  • 2011-06-29
  • From wire reports

TALLINN - The board of the Confederation of Trade Unions stated on June 21 that Riigikogu will have to start making sure before decision-making that proposals put to vote would be in compliance with the recommendations to Estonia for guaranteeing balanced socio-economic development, reports Aripaev Online. The trade union leaders convened in order to discuss two decisions that were adopted in Riigikogu the previous week – on lowering income tax and abolishing land tax on land under homes. The first was stated to be directly in opposition to the European Commission’s positions, and the second is not in line with recommendations from the OECD.

At the beginning of June, the European Commission recommended Estonia first and foremost lower the tax burden for people with low and medium-sized incomes, and decrease social taxes so that budgetary revenue would not decline.
“If income tax for all people is to fall uniformly by one percent, employees earning high wages would gain the most from this move while revenue to the State budget would fall significantly,” noted the chairman of the Estonian Confederation of Trade Unions, Harri Taliga. He pointed out that the subsistence of low-income citizens will not improve from that step, while they would suffer from the decline in the volume of social services financed from tax revenue.

In April, the OECD recommended that Estonia increase the share of taxes on property; among the recommended measures was to consolidate the cost of taxable land with market prices and to establish real estate tax on buildings as well.
“If our decision-makers ignore authoritative international recommendations due to their political priorities, it appears that there was no sense to join the OECD,” said Taliga. “This organization shares with us their recommendations on the basis of neutral expertise in comparison to other developed countries, aiming to help Estonia solve its social and economic problems,” he added.