Estonia's tax man cometh

  • 1999-01-28
  • Kairi Kurm
As the Estonian Parliament considers introducing a progressive income tax, Kairi Kurm hit the streets to find out what people think.

Last year, the Central Party proposed that people with a high income should pay more in taxes and submitted a bill to the Parliament to push this agenda.

Since 1993, all Estonians have to pay the same income tax of 26 percent, but the party thinks that people who earn just enough to survive should not be taxed. The minimum monthly wage of 1,200 kroons ($89.6) should be tax free.

Income up to 2,967 kroons will be taxed at 15 percent, while income up to 7,133 kroons will be taxed at 25 percent. The next break line is at 40,467 kroons. Those earning less will have to pay 29 percent income tax, and those who earn more will have to pay a 33 percent tax.

The new bill reduces the tax burden for people with average wages. Currently, they are paying 988 kroons in taxes from an average monthly wage of 4,300 kroons, but if the Central party's proposal is supported, they will have to pay only 478 kroons.

The Center Party believes that what the budget loses in income tax revenue will come back as VAT revenue as people will have more disposable income and thus buy more products. The proposed change should also decrease the number of families who need additional support.

Andro, international safety manager:

People will start showing a smaller income and the rest will be received in envelopes. There are a lot of people who receive above 7,133 kroons and will lose with the progressive income tax. Most of the people receive between 10,000 kroons and 20,000 kroons. Poorer people will win from the proposed system. I will lose and I am against it. Young people need money to start their life. I suggest raising taxes from incomes above 20,000 kroons or 30,000 kroons.

Aleksandr, director at a trading company:

The government will not win with the progressive income tax. Those who work less earn less money. Those who work more have the right to earn more. Why should the government punish me for wanting to earn more? With this bill, the government will take two steps backward. The initiative of people to do good things is weakened if they know that income will be taken away from them.

The proportionate income tax does not influence my income, but it does influence the income of my family which is working. It seems to me that the progressive tax on income does not support business. It does not stimulate business. It is also not good to help under-supported people and thus create an increased number of unemployed.

Georg, an entrepreneur:

I support this action of dividing money on equal terms although I will have to pay more taxes. We must help those who cannot help themselves. But I do not believe that this bill will go through. The time is not right for these kinds of changes. People have to get on their feet before they are able to pay more taxes. I suggest postponing it.