Second Reading of the Bill to Amend the Income Tax Act (443 SE)
Session: 15th Riigikogu, extraordinary session of the Riigikogu
Date: 2024-07-29 18:40
Participating Politicians:
Total Speeches: 59
Membership: 15
Agenda Duration: 54m
AI Summaries: 59/59 Speeches (100.0%)
Analysis: Structured Analysis
Politicians Speaking Time
Politicians
Analysis
Summary
The agenda included the second reading of Draft Act 443 on amendments to the Income Tax Act, initiated by the Government of the Republic, which is popularly known as the "Robin Hood" bill. Priit Lomp, a member of the Finance Committee, provided an overview of the committee's discussion, which was also attended by representatives of the Association of Estonian Cities and Municipalities. Lomp confirmed that the bill has generated conflicting opinions among local governments, effectively dividing the local government units (LGUs). He pointed out that the City of Tallinn contributes nearly 8 million euros to the redistribution, while the Jõgeva rural municipality receives additional revenue of about 3 million euros over five years.
The Isamaa faction submitted amendments concerning the postponement of the abolition of the tax hump until 2028. The committee decided not to take these proposals into account. During the negotiations, the opposition (Isamaa and the Centre Party) sharply criticized the government's approach, emphasizing that regional balance should be achieved by increasing the revenue base of LGUs at the expense of state budget revenues, not by redistributing money between local governments. The opposition also drew attention to the fact that the government's tax increases (VAT, excise duties, car tax) only increase the state budget, leaving LGUs only with additional costs. The Isamaa faction proposed interrupting the second reading, but this was rejected in the vote (13 in favor, 55 against). The second reading of Draft Act 443 was concluded.
Decisions Made 3
The Isamaa faction's amendment proposal No. 1 (the postponement of abolishing the tax bulge) was rejected in the vote (13 in favor, 55 against).
The proposal by the Isamaa faction to suspend the second reading of Bill 443 was rejected (13 votes for, 55 votes against).
The second reading of Bill 443, the draft act amending the Income Tax Act, initiated by the Government of the Republic, was concluded.
Most Active Speaker
Aivar Kokk was highly active, both in posing questions and participating in negotiations. He sharply criticized the government's "Robin Hood" policy concerning the funding of local authorities, stressing that the state should increase the revenue base for municipalities at the expense of the national budget. His position is superior.
Aseesimees Toomas Kivimägi
AI Summary
The third item on the agenda involves the discussion of the second reading of Draft Act 443 on Amendments to the Income Tax Act. The rapporteur will be Priit Lomb, a member of the Riigikogu Finance Committee.
Priit Lomp
AI Summary
The Finance Committee debated draft bill 443, nicknamed 'Robin Hood,' which proposes amendments to the Income Tax Act. The committee resolved to conclude the second reading and proceed with the third reading and final vote as soon as possible, appointing Priit Lomp as the lead committee's representative. Simultaneously, it was highlighted that the Association of Estonian Cities and Municipalities considers the draft legislation to be divisive for local governments.
Aseesimees Toomas Kivimägi
AI Summary
He/She apologized and said that while the discussion about the server is interesting, we actually have a different topic at the moment.
Priit Lomp
AI Summary
He suggests that you discuss your matters outside this hall because it is distracting.
Aseesimees Toomas Kivimägi
AI Summary
He confirms that negotiations are forthcoming, asks Mr. Reinsalu to be prepared, and stresses the importance of respecting the speaker.
Priit Lomp
AI Summary
Priit Lomp stated that they reviewed the stance of the Association of Cities and Rural Municipalities and discussed the funding of local governments. Topics for the autumn session were mapped out, and efforts were made to ease the budget cuts affecting wealthier municipalities. He also noted that Isamaa's two proposed amendments were interconnected and they had wished to combine them into a single proposal, but the decision was made to set them aside. The subsequent vote resulted in 2 in favor, 7 against, with no abstentions.
Aseesimees Toomas Kivimägi
AI Summary
Toomas Kivimägi thanks the audience and asks Andrei Korobeinik to come up on stage.
Andrei Korobeinik
Profiling Eesti Keskerakonna fraktsioonAI Summary
He pointed out that the opinion of the Association of Cities and Municipalities had not been taken into account, even though local governments were evenly split on the issue, and stated that the letter sent to the commission was aggressive regarding the draft law, requesting clarification on what the letter contained.
Priit Lomp
AI Summary
Priit Lomp stated that the feedback from the first coordination round involved 30 municipalities (15 in favor, 15 against). The 31st municipality also submitted its opinion, but during the discussion round, the larger municipalities were more vocal and adopted a stronger stance on the draft legislation.
Aseesimees Toomas Kivimägi
AI Summary
The purpose of this address is merely a request: to invite Aivar Kokk to the stage.
Aivar Kokk
Profiling Isamaa fraktsioonAI Summary
Aivar Kokk asks the presenter for examples and inquires about the size of the sums local governments might receive due to this law, and how much, for instance, Kastre, Tartu, Pärnu, or Tallinn would have to pay out of their own budgets.
Priit Lomp
AI Summary
Priit Lomp said that changing the redistribution model will increase funding for local governments where the proportion of elderly residents is higher, and the wealthier areas should contribute more. For example, Tallinn will contribute 8 million euros next year, while Pärnu will receive back about 600,000 euros from this, Saaremaa Parish about 400,000 euros, and Jõgeva Parish about 3 million in additional revenue over five years.
Aseesimees Toomas Kivimägi
AI Summary
Toomas Kivimägi, the Deputy Chairman, said that Aivar was naturally expecting this position, and then invited Helir-Valdor Seeder.
Helir-Valdor Seeder
Profiling Isamaa fraktsioonAI Summary
Helir-Valdor Seeder said that Estonia's regional balance is out of whack and the current tax policy is only making it worse. He added that the proposed car tax bill will have a negative regional impact because the revenue will only be distributed among local municipalities instead of increasing overall funding. Therefore, it would be justifiable to direct this additional revenue to poorer municipalities based on their specific needs (such as kindergartens, extracurricular activities, schools, and social expenditures), rather than simply taking money from one municipality and giving it to another without any proper analysis.
Priit Lomp
AI Summary
Priit Lomp points out that local governments are underfunded and need additional resources for kindergartens, school places, and elderly care. Although the current focus is on addressing the state budget difficulties and making budget-neutral proposals, he hopes that a healthier budget and growth in tax revenue will bring more funding to local governments in the coming years, alongside the implementation of the Robin Hood method.
Aseesimees Toomas Kivimägi
AI Summary
Deputy Speaker Toomas Kivimägi asks Andrei Korobeinik to come forward.
Andrei Korobeinik
Profiling Eesti Keskerakonna fraktsioonAI Summary
Andrei Korobeinik expressed confusion as to how the majority of the board of the Association of Cities and Municipalities supported the draft bill, given that the letter sent to the commission stated the exact opposite—that redistribution is wrong. He went on to emphasize the need to increase local government revenues and questioned how such a contradictory position could have arisen.
Priit Lomp
AI Summary
The presentation confirmed that the general assembly serves as the representative body for local municipalities, but views and decisions are reviewed by the management board. Furthermore, during the committee session, it was stressed that compensation must be clearly defined in law should the revenue base decrease. It was also noted that proposals from wealthier municipalities have begun to be considered, even though the chairman of the Association of Cities and Rural Municipalities was noticeably more reserved during the meeting than the board itself.
Aseesimees Toomas Kivimägi
AI Summary
Deputy Chairman Toomas Kivimägi calls on Rain Epler.
Rain Epler
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Rain Epler raised the concern that the draft legislation, under which citizens of the Russian Federation would be able to vote in Estonia, might temporarily boost tax revenue for local governments, but could, in the long run, increase youth emigration and deepen the divide in poorer regions.
Priit Lomp
AI Summary
Priit Lomp asserted, drawing from his personal experience, that there is no risk in Estonia of local governments differentiating between people. He added that even though local government politics involves more components for discussion, the municipalities want all their residents to remain within their jurisdiction.
Aseesimees Toomas Kivimägi
AI Summary
Aivar Sõerd is called upon to speak.
Aivar Sõerd
Profiling Eesti Reformierakonna fraktsioonAI Summary
Aivar Sõerd presented a question to the committee regarding the criteria for evaluating local government investments and asked why the state should prioritize investments similar to community centers or libraries. He referenced an example where the Viimsi municipality had to donate money planned for a landscaping project to another municipality, and further inquired about what constitutes good and bad investments and what the state should be stimulating.
Priit Lomp
AI Summary
Using the example of Viimsi, Priit Lomp pointed out that postponing certain investments could help maintain existing services. He then asked whether a delay of one or two years would have the same significant impact on the community as closing schools or libraries.
Aseesimees Toomas Kivimägi
AI Summary
The Deputy Chairman invites Vladimir Arhipov to speak.
Vladimir Arhipov
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Vladimir Arhipov emphasizes that Estonia has survived the collective farm era and that the idea of the “golden ring” around Tartu and Tallinn is an old concept. He adds that aid for lagging municipalities is necessary, but at the expense of others, and calls on the commission to consider restoring a tax system that took money from local governments, in order to return that money and ensure everyone is well off.
Priit Lomp
AI Summary
Priit Lomp said that the growth of the golden and silver rings is often not driven by population growth, but rather frequently comes at the expense of the rest of Estonia. He stressed their willingness to contribute to the redistribution effort and noted that Maardu will receive 2.7 million euros in this process, which they intend to use wisely.
Esimees Lauri Hussar
AI Summary
Chairman Lauri Hussar calls on Aivar Kokk to take the floor.
Aivar Kokk
Profiling Isamaa fraktsioonAI Summary
Aivar Kokk is asking why the planned increase in the revenue base for local governments, which was outlined in the 2022 State Budget Strategy (RES), was altered during the negotiations between the two coalitions, and why more than 12% of the personal income tax should have been collected starting this year.
Priit Lomp
AI Summary
Thank you. This was not discussed at the meeting of the Finance Committee, and I have supported the negotiations from the spring of 2023 and the summer of 2024.
Esimees Lauri Hussar
AI Summary
The Chairman thanks the presenter and announces there is one more question, then invites Anti Allas to speak.
Anti Allas
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Anti Allas raised for discussion the issue of the debt accumulated by local governments over the years, stressing that the system depends on the income of people receiving wages and that services must be provided. He then asked whether the debts would be resolved in a single instance or if they would need to be reviewed again in the future.
Priit Lomp
AI Summary
This measure is intended to operate within the legal framework. It is designed to help local governments cover increased interest costs or rescue certain public services. The power of decision rests with the council of each local government; the commission did not discuss it in such specific detail during the session.
Esimees Lauri Hussar
AI Summary
Chairman Lauri Hussar invites Vladimir Arhipov to speak.
Vladimir Arhipov
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
He pointed out that the previous redistribution of land tax resulted in losses of nearly a million euros for Viimsi Municipality, Maardu City, and Lääne-Harju Municipality, and the promised reimbursement has still not materialized. Now, a similar redistribution is being planned—is this justifiable?
Priit Lomp
AI Summary
We have attempted to propose a budget-neutral solution that would provide local governments with some relief, and although wealthier local governments desire greater autonomy, and opportunities have been or will be provided to them during the land tax proceedings, these specific issues were not discussed at the Finance Committee meeting.
Esimees Lauri Hussar
AI Summary
The Chairman asks Arvo Aller to speak.
Arvo Aller
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Arvo Aller asks whether the Ministry of Finance or the remit of the Regional Minister is responsible for the overview of 2029 revenue receipts and its impact analysis.
Priit Lomp
AI Summary
Priit Lomp emphasized that the regional perspective must be addressed jointly in the chamber, and if the government presents a draft bill that is regional policy in nature but financial in structure, more than two parties may be involved, and these issues will be discussed further within the government.
Esimees Lauri Hussar
AI Summary
Speaker Lauri Hussar called upon Arvo Aller to ask his second question.
Arvo Aller
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
He is asking for clarification on who the minister responsible for this area is and who will be analyzing it.
Priit Lomp
AI Summary
Matters of regional policy have been placed under the administrative purview of the Minister for Regional Affairs. Going forward, the Regional Minister and their team will monitor and analyze the implementation of these policies, including in the context of monetary policy decisions being prepared or adopted by the Riigikogu.
Esimees Lauri Hussar
AI Summary
The Chairman thanked the rapporteur, announced that the question period was now closed, and opened the debate, inviting colleague Aivar Kok to the Riigikogu rostrum.
Aivar Kokk
Profiling Isamaa fraktsioonAI Summary
Aivar Kokk criticizes the draft bill, calling it merely money moving from one pocket to another, which burdens local governments and individuals and increases the tax burden. He accuses the coalition of pursuing an economic policy that fails to improve living conditions or the funding of local governments.
Esimees Lauri Hussar
AI Summary
Chairman Lauri Hussar announces that three minutes of extra time will be granted.
Aivar Kokk
Profiling Isamaa fraktsioonAI Summary
Aivar Kokk criticizes the draft bill and the tax hikes, arguing that they do not increase the revenue of the state or local governments. Instead, he claims they merely keep the overall money supply the same while increasing the tax burden, thereby endangering the development and quality of life in rural areas. He calls for an end to these tax increases and the redistribution of money, urging that resources be directed toward investments in roads, internet infrastructure, and public transport.
Esimees Lauri Hussar
AI Summary
The Chairman thanks the speaker and invites colleague Helir-Valdor Seeder to speak next.
Helir-Valdor Seeder
Profiling Isamaa fraktsioonAI Summary
The Isamaa faction believes that the bill represents an unsuccessful tax policy that merely redistributes local government revenue without increasing their overall revenue base. Therefore, the faction calls for the suspension of the second reading and proposes using amendments to ensure regional equality for local services, funded at the expense of the state's revenue base.
Esimees Lauri Hussar
AI Summary
Next, Vadim Belobrovtsev is called to the Riigikogu rostrum.
Vadim Belobrovtsev
Profiling Eesti Keskerakonna fraktsioonAI Summary
Vadim Belobrovtsev claimed that the regional policy draft bill allocates funds to wealthier local governments and reduces the previous percentage of support. Consequently, promises must be kept, support must be restored, and sufficient, fair funding must be guaranteed for all local governments.
Esimees Lauri Hussar
AI Summary
The Chairman thanks [the body] and calls upon his colleague, Rain Epler, to take the Riigikogu rostrum to speak.
Rain Epler
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Rain Epler points out that although the Social Democrats talk about helping the poor, they are actually robbing money from local governments and people’s pockets, and increasing taxes that especially burden rural areas.
Esimees Lauri Hussar
AI Summary
The Speaker thanks the assembly and invites Andres Metsoja to the Riigikogu rostrum.
Andres Metsoja
Profiling Isamaa fraktsioonAI Summary
The report highlights the necessity of increasing the revenue base for local municipalities, arguing that redistribution and the dissolution of county governments are creating disparities, leading to investments concentrating in major centers. This matter should be debated in the Riigikogu.
Esimees Lauri Hussar
AI Summary
Chairman Lauri Hussar offered his thanks, closed the debate, and directed the proceedings toward the review of the next set of amendments, submitted by the Isamaa faction, which the lead committee recommends rejecting; Helir-Valdor Seeder, you have the floor.
Helir-Valdor Seeder
Profiling Isamaa fraktsioonAI Summary
He thanks you and requests a vote on this amendment.
Esimees Lauri Hussar
AI Summary
Chairman Lauri Hussar announced that amendment proposal No. 1, submitted by the Isamaa faction, would be put to a vote, noting that the leading committee's position was to disregard it, and requested the Riigikogu to take a position and vote.
Esimees Lauri Hussar
AI Summary
Speaker of the Riigikogu Lauri Hussar announced that a motion has been made to conclude the second reading of Bill 443, and the decision by the Isamaa faction to suspend the second reading of the draft Act amending the Income Tax Act will now be put to a vote.
Esimees Lauri Hussar
AI Summary
Thirteen members of the Riigikogu voted in favor of the motion, 55 were against, and there were no abstentions; the proposal failed to gain support, and the second reading of Draft Bill 443 is concluded. The first sitting of the extraordinary session has ended, and the second sitting will commence precisely at 17:34.