Rift develops on land taxes

  • 2011-06-08
  • From wire reports

TALLINN - The land tax concession for home owners that the government intends to implement under the pressure of junior coalition member Pro Patria and Res Publica Union (PRU) has caused a conflict in the senior coalition member Reform Party, reports Postimees. The attitude of many high-level Reform Party members to the corresponding draft law is very negative and the conflict between supporters and opponents of the law is strongly disturbing the work of the government and the Riigikogu. The biggest critic of the law’s amendments, Finance Minister Jurgen Ligi, may even lose his job over the negative opinions he has voiced on the issue.

The most fundamental issue of the dispute is: is it reasonable that land, which is a limited resource, be free of taxes?
PRU is in such a hurry with its draft law that amendment proposals to it could be submitted only until June 3, with the first reading of the bill in the parliament to take place this week.
On Monday the Riigikogu Finance Committee was to meet with local municipality union leaders to discuss the issue of compensating for the part of tax that municipalities would lose.

The Estonian government approved on May 26 a draft law to abolish land tax for home owners in cities and towns on plots of up to 1,500 square meters, and elsewhere on up to two hectares of housing land. The homeowners can benefit from the tax concession in case that their home is registered in the population registry as their place of residence.
Since land tax is channeled to local municipalities, they would be deprived of some 17 million euros a year, which will be covered from the state budget.