Estonia passes next years budget

TALLINN - The Estonian parliament has passed the 2009 state budget with a multi-billion kroon deficit.

The budget, which passed with a vote of 60-29 in the 101-member chamber, projects revenues at 97.838 billion kroons (6.25 billion euros) and expenditure at 98.474 billion kroons.

Taking into account also the additional cuts introduced through the text of the budget, the expenditures work out at 96.7 billion kroons, the Finance Ministry said.

The chairman of the standing Finance Committee, Jurgen Ligi, said before the vote that the panel failed to actually bring about budget balance. "It shows a deficit of at least three billion (kroons) and that's a problem," Ligi said.

Increase in foreign aid accounts for the biggest growth in the next year's budget.

The government decided in the budget process that the income tax rate will not be lowered next year as planned earlier and it will remain at the current level of 21 percent. An extra portion of income will not be exempted from tax with the birth of a first child and the amount of tax-exempt income will stay at the present level of 2,250 kroons a month.

The larger taxation changes concern VAT rates. The reduced VAT rate on books and school workbooks, medicines, periodicals and the accommodation service will rise from the present 5 percent to 9 percent next year.

The 2009 budget includes a pay rise for teachers and growth of pensions.