Tax reserves in surplus

  • 2010-09-15
  • From wire reports

TALLINN - High unemployment insurance taxes have caused the Estonian Unemployment Insurance Fund (UIF) to accumulate large reserves, and the minister of social affairs, Hanno Pevkur, has stated that it would be a good idea to consider lowering the taxes from the year 2012, reports Postimees. Trade unions, on the other hand, would like the tax rates to be lowered already next year, as the Unemployment Insurance Fund’s budget is in surplus despite the high unemployment rate and the reserves are growing each year.

Currently 2.8 percent of wages of all employees go to UIF. Employers add 1.4 percent. The reserves can be used only to pay benefits to the jobless, and nothing else.
UIF council chairman Pevkur said on Sept. 13 that from 2012, unemployment insurance tax could be lowered as cutting labor taxes helps to create jobs. “It has to be thought about at the first possible chance,” said Pevkur. The tax rates should remain the same next year, since the crisis isn’t over yet and no one knows what could happen with the level of unemployment, said the minister.