CALCULATED RISK: Local communities look to creative ways to increase tax revenues.
TALLINN - The Harku parish, near Estonia’s capital Tallinn, is creating a precedent by abolishing land tax for the people who are registered as the parish’s official residents, reports Aripaev. “We hope to get very direct income from this step, since while one person pays an average of 1,200-1,300 kroons (83 euros) of land tax [a year], a resident pays an average of 12,000 kroons of income tax. It is ten times higher,” said Harku parish governor Kaupo Ratsepp.
The parish governor says that this is not a populist decision. The parish has calculated that if they gained 400 new registered residents this year, it would cover the land tax concession that would cost the parish 3-4 million kroons.
According to studies, the parish has around 3,000-3,500 people living there who have not officially registered the parish as their place of residence and thus their income tax goes to some other parish, where they are officially registered. Altogether 3,400 owners of housing land have registered themselves as residents of Harku parish and they pay around 5.7 million kroons of land tax a year.
On the one hand, the parish thus hopes to increase the number of its official residents, and on the other hand they want to ensure equality: there are a lot of summer cottages in the parish and those people use the parish’s infrastructure, while local residents, whose taxes go to the parish, have to pay for that.
Estonian regional minister Siim Kiisler praised the initiative, saying that he is glad to see that there are municipalities who find ways of increasing their own income base.