No. 12




Environmental protection and budget gaps

14 December 2005


RiTo No. 12, 2005

There has been much big talk in Estonia on the topic of ecological tax reform lately.

Unfortunately a new draft of the environmental fees act introduced in the Riigikogu at the end of September shows that compensating workforce tax cuts through raising environmental fees has been empty talk. Even the explanatory memorandum to the draft emphasizes the need for making environmental investments of over several ten billion kroons into water and refuses management, and uses it as justification for a significant rise in many pollution fees. The writer of the article has no desire to impugn the noble goal of ecological tax reform – shifting tax burden from taxing the workforce on to taxing the use of natural resources. But we cannot call what is happening in Estonia ecological tax reform, but rather an environmental fee hike, plain and simple. Just as raising pensions by a couple hundred kroons does not a pension reform make, neither can raising environmental taxes be magnanimously termed tax reform. If it could be done, the term would be devalued.

Full article in Estonian