TALLINN - The Confederation of Employers urged the Estonian government to carry out more extensive analyses on the impact an increase in the excise tax rates would have on the state budget and on the adoption of the euro, reports news agency LETA. "The surges in excise taxes benefit the illegal economy and decrease the capacity of legally operating enterprises to execute their investment and exports plans," said the organization. The employers' group added that the corporate tax burden in Estonia has been raised "dangerously high."
Without real cuts in spending in the public sector, the tax burden for entrepreneurs would go even higher, while the social tax rate is already the highest in Europe, says the group. "The additional value added tax, income tax on dividends, taxes on special bonuses and excise taxes are turning Estonia into a state where business activities, rather than favored, are being punished," reports the Confederation.
The adoption of the euro is certainly important, but the abrupt increase in excise taxes could cause the opposite effect 's expected revenue would not be collected and the euro would be postponed indefinitely.
The Confederation of Employers noted that the tax burden on employees is limited to the lowest income tax in Europe for individuals, and to a small contribution to the unemployment insurance system. In this context, the employers feel that there is no justification to constantly discriminate against a successful and exporting industrial sector with annual major tax increases.
The government last week decided to raise the excise tax on alcohol, starting Jan. 1, 2010, by 10 percent, and the excise tax on tobacco by 20 percent.