Justice chancellor: Estonia's payments into EU budget may grow by EUR 34 mln

TALLINN – Joining the European Union's recovery facility loan scheme may mean that Estonia will have to make annual payments higher by an estimated 34 million euros than the present into the EU budget in the future, Estonia's Chancellor of Justice Ulle Madise writes in her latest annual review.

The EU is borrowing up to 750 billion euros to help member states address the challenges posed by the COVID-19 pandemic. Never before has the EU borrowed an amount of such size. The chancellor of justice considers that by approving the loan decision, Estonia will not relinquish additional competences to the EU.

By a decision of May 10, 2021, the Riigikogu approved a plan for financing the EU's recovery plan, part of which is the payment of the plastic packaging waste tax into the union's budget. 

"In the 2003 referendum, the people of Estonia, by deciding in favor of accession to the European Union, also gave the right to use the powers laid down in the European Union Treaties, including a possible change to the system of own resources," Madise writes in the 2020/2021 annual review.

Analyses have found that the regulation of the recovery facility is in line with the EU treaties and that the use of off-budget earmarked loans for lending to member states or project financing is in principle allowed under the treaties.

The chancellor of justice explained that each member state is responsible for the repayment of the loan according to its contribution to the union's budget and that no liabilities are made towards the other member states.

"Since the volume of possible additional liabilities in the future is not extensive compared to the volume of the state budget of Estonia, and the increased contributions to the European Union budget will be limited in time and amount, the commitment of such a proprietary obligation cannot be considered unacceptable as a limitation of the budgetary competence of the next compositions of the Riigikogu," she noted. 

Madise also pointed out that a tax based on the amount of unrecycled plastic waste does not bring with itself a restriction of the financial competence of the Riigikogu, as Estonia has not given the EU the power to impose any taxes and Estonia has not been obliged to impose any taxes in connection with this decision.

The chancellor of justice pointed out that the so-called plastic tax is not a tax within the meaning of the Constitution, which is paid by individuals and companies to the state, but is a component of the contribution made by the member states to the union's budget, calculated on the basis of the amount of plastic waste not recycled.

"One of the goals of the payment is to influence the EU member states to reduce plastic packaging waste. If Estonia fails to reduce the amount of plastic waste or increase the amount of recyclable packaging, Estonia will incur an additional burden of 11 million euros per year, paid jointly by all Estonian taxpayers," Madise explained.