Estonia cannot continue with its current tax base and new taxes are needed, speaker of the Riigikogu and chairman of the Center Party Juri Ratas has said. He reemphasized the point later at a party council meeting.
On June 18, Ratas was asked by presenters Timo Tarve and Ainar Ruuhar on Kuku raadio’s “Kahe vahel” show if the Estonian tax system should be reviewed.
“I think it needs to be reviewed. But the question is not about the tax system, the question is what kind of Estonia we want,” Ratas said.
He said Estonia had become a welfare state and the question was now if this could continue.
“I argue that this tax base does not work. Or we need to change some services in health care, pensions, education. I don’t think services should be reviewed. It is necessary to look at taxes,” Ratas said, adding no party – including his own – took the tax debate seriously before 2019.
Ratas said new taxes could come from a social care insurance tax or the taxation of corporate profits. He did not think VAT should be increased but that a graduated income tax, or so-called progressive tax, should be discussed again.
The subject of a debate over Estonia’s tax system has been discussed in recent weeks after the government said it needed to cut EUR 60 million to balance the budget and the recent G7 agreement to create a minimum level of corporation tax.
Both Prime Minister Kaja Kallas (Reform) and Ratas have said they support reforming and modernizing the Estonian tax system but actions have not yet been taken.
Speaking on June 19 while introducing the party’s local election pledges, Ratas again raised the subject of new taxes. He said there should be a social care insurance tax and that social tax should be paid on dividends withdrawn from private companies.
Ratas said the social care tax could be a 2% tax divided between the employee and the employer, which could help to ensure people could age with dignity in their later years.
Ratas said the Center Party continued to stand for the introduction of a graduated income tax and also raised the subject of corporate income tax.
“Undoubtedly, this is an issue that does not generate too much enthusiasm, but it is clear that with today’s tax burden, many important issues will either remain unresolved or the problem areas will become even more acute over the years,” Ratas said.
“During the crisis, we saw especially clearly how important a strong safety net is and the state’s support for companies and the people of Estonia. Even now, it would be wrong to think that help is no longer needed. On the contrary, the crisis has shown even better where there is room for improvement, what our weaknesses are,” he said. (ERR/Business World Magazine)