Taxes and fiscal policy
The author believes that Estonia’s fiscal policy is outdated and in need of serious reconsideration because it is no longer sustainable in its present form.
The average tax burden in the European Union Member States is 39.9 % of the GDP; or as high as 40.5 % in countries of the Euro zone. Estonia with its 31 % ranks 23rd. The author is convinced that this tax burden is not sustainable. The first recommendation made to Estonia by the IMF, the World Bank and other financial policy advisors concerns the taxation of property. Only land is taxed in Estonia at the moment, although the need to pass from land tax to overall real estate tax has been discussed for years. The issue has remained on a standstill mainly because the property reform in Estonia has resulted in a great number of land and real estate owners whose income and assets are not balanced and who would therefore react extremely sensitively to the introduction of a real estate tax. On the other hand, the author does not understand why Estonia is the only country in the European Union not to have introduced a car tax.