State taxes certain to drop

TALLINN - At a time when prices and salaries are going up, some state taxes are about to drop by roughly 50 percent. The initiative comes from Transportation and Communications Minister Toivo Jurgenson, who proposed to the Ministry of Finance on Aug. 8 to reduce some of the state taxes associated with car registration.

Car registration taxes, which are expected to bring in 145 million kroons ($8 million) in 2001, comprise one-fifth of the total national-tax budget.

According to the proposal the tax for issuing a driver's license would decrease from the present 380 kroons to 200 kroons; on a new temporary driving license it would drop from 250 kroons to 150 kroons; for a motor-vehicle operator's written theory test it would drop from 380 kroons to 200 and by the same amount for the driving exam itself.

The new proposal would, according to Aap Tanav, spokesman for the Ministry of Communications, cut the state's tax revenue in next year's budget by 20 million kroons.

Tanav said that the aim of the tax was to cover the costs of certain activities, rather than to increase the revenues for the national budget. "The size of the taxes are strained and Estonian citizens are complaining loudly,"he said.

The two ministries have already agreed on bringing down the prices of moped licenses and exams from 100 kroons to 80 kroons.

"This is close to its actual cost,"said Tanav. "We've proposed to decrease taxes to the levels they were in 1999. There's still a lot of air in it. The actual costs of the proceedings are much smaller."

Tanav said that the ministry was not planning to reduce taxes on telecommunications' licenses even though they were relatively high compared to their actual costs. "The third-generation mobile network licenses, for example, are a limited resource and there is a high demand for them,"he explained.

Kalle Kagi, head of the Estonian Taxpayers Association, said that it was unclear how the state tax rates had been established.

"It's strange that a building registry certificate, for example, is 20 times more expensive than a trade registry report although there is a similar procedure involved,"said Kagi.

The association is planning in a couple of weeks to propose to the Ministry of Finance a method for calculating state taxes. "People want to know where their money goes,"said Kagi.

Daniel Vaarik, an adviser to the Ministry of Finance, said that all suggestions were welcome. "State taxes are established in different ways. Our task is to control whether they are correct, and sometimes we've had problems with that. It's difficult to say how much things cost."

Tanav accused the Ministry of Finance for increasing all the suggested taxes rates by two times. "Most of the times it has been the government's decision to increase the rates in order to balance the budget,"said Vaarik. "We are not planning to decrease other state taxes at the moment. We have a budget to put together."

The revenue from national taxes increased by almost 50 percent in the year 2000, from 455 million kroons to 665 million kroons. The Ministry of Finance hopes to collect a total of 698 million kroons in state taxes this year.