Association: New tax to increase already high tax burden for Estonian car owners

  • 2023-07-19
  • BNS/TBT Staff

TALLINN – The Estonian Car Owners Association (EAOL) argues that the draft document of legislative intent to introduce a car tax in Estonia, made public by the Ministry of Finance on Wednesday, is unfair to car owners and taxpayers because it would increase the already high tax burden of car owners and has no understandable purpose other than filling state coffers.

According to Priit Tammeraid, chairman of the board of the EAOL, proceeds from the fuel excise duty -- the car tax already in place in Estonia -- are more than double the amount spent on the country's road network, which is why it is not justified to collect an additional 120 million euros for car ownership.

"Finland, for example, spent 3.1 billion euros on roads in 2021 in a situation where 2.5 billion euros was received in fuel excise duty," Tammeraid said. "In addition, an additional 1.6 billion euros was collected in Finland through the annual tax and registration tax on motor vehicles. However, three-quarters of the total went to the road network, whereas we will direct less than 50 percent of the excise duty collected to the road network this year."

In addition, the excise duty on motor fuel will start to increase in Estonia from 2024. Through the years, the government has justified the very high excise duty on motor fuel with the absence of a car tax in Estonia. Today we see that what we are getting is both higher excise duties and a car tax, he said.

The board of the EAOL deplores that the authors of the legislative intent have effectively not taken into account any of their arguments.

"People always choose a car out of necessity. There is no way that the car tax, for example, will fit three children in a smaller car. However, the family will have an additional expense that has to be paid at the expense of something else," Tammeraid said. 

The board of the EAOL opposes the introduction of any form of additional car tax. A relevant petition initiated by the EAOL has been signed by more than 15,500 people to date. According to Tammeraid, the number of signatures given indicates people's serious concerns.

"It's still possible to sign the petition against car tax. If I were a politician imposing the car tax, I would be very concerned because the voter's memory may not be sort-lived this time," he added.

In Estonia, the excise duty on motor fuel is 56.3 cents per liter for gasoline and 37.2 cents per liter for diesel. The excise duty on diesel will start to rise from 2024 and is slated to reach 49.3 cents per liter in 2027.