No. 15




Reducing labour taxes will balance the rise in the rate of environmental fees and taxes

14 December 2005


RiTo No. 15, 2007

  • Aivar Sõerd

    former Minister of Finance and current member of the board of Tallink Hotels group OÜ TLG Hotell

One of the main trends of Estonian tax policy in the years ahead is to reduce labour taxes in order to support increased total employment, instead putting more taxes on consumption, use of natural resources, and environmental pollution.

If we want to be sustainable, market participants must be given a sign, through tax policy measures, that fair fees are to be paid for consumption, using natural resources and polluting the environment. Ecological tax reform will not result in a general increase in tax burden, since the income tax has already begun to be lowered. Ecological tax reform must be accompanied among other things by the abolition, or at least a significant reduction, of so-called environmentally unfriendly subsidies. One important step has already been taken: Estonia has received permission from the European Commission to exempt biofuels used for heating purposes from the excise tax.

Full article in Estonian