Parliament approves vice tax hikes

  • 2007-06-20
  • By Joel Alas

TALLINN - The Parliament has passed a raft of tax law changes that will see cigarettes, alcohol, gas and electricity all increase in cost in 2008.
But in line with the government's election promises, income tax will drop to 18 percent by 2011.
The tax changes were approved by the Riigikogu on June 14, with only Center Party parliamentarians voting against them.

Income tax will fall to 18 percent, while the tax-free threshold will increase to 36,000 a year (2300 euro). Parents will also be eligible for further tax exemptions following the birth of their first child.
The cost of a bottle of beer will increase by about 0.55 kroons thanks to two alcohol excise hikes, the first in early 2008 and the second six months later. A half liter of spirits will increase in cost by about 11 kroons 's from an average of 60 kroons to 71.7 kroons.
Tax on cigarettes will rise from 11 kroons per pack to 20 kroons, taking the average cost for a pack of smokes from 21 kroons to 31.6 kroons.
Refueling your car will also become more expensive, with gasoline and diesel excise duty increasing to the EU minimum in January 2008 's from 4.5 kroons per liter to 4.82. The average liter of petrol now costs 14.4 kroons, but will rise to 15.7 kroons, the Ministry of Finance said.

Household electricity will be slapped with a tax of 0.05 kroons per kilowatt hour. However a Ministry of Finance spokeswoman said the real cost to consumers should not increase.
"There was no excise paid on electricity before. However, the Government has also cut the environmental taxes paid by electricity producers for polluting the environment," the spokeswoman said, "For producers, it will not be more expensive to produce electricity. If prices rise for consumers, it should not be related to the excise."

Center Party leader Edgar Savisaar criticized the Government's economic policy, saying excise tax increases would worsen Estonia's international competitiveness.
Savisaar said he was now concerned about the new taxes, the high loan burden, tensions with Russia and the dangers of possible changes in the real estate market.