First reading of the draft law amending the Income Tax Act and the Defence Service Act, and the draft law amending the Income Tax Act (509 SE)
Session: 15th Estonian Parliament, 4th session, plenary session
Date: 2024-10-15 13:54
Total Speeches: 65
Membership: 15
Agenda Duration: 1h 7m
AI Summaries: 65/65 Speeches (100.0%)
Analysis: Structured Analysis
Politicians Speaking Time
Politicians
Analysis
Summary
The Riigikogu discussed the bill regarding amendments to the Income Tax Act and the Defense Service Act, and the bill regarding amendments to the Income Tax Act, for its first reading (509). The main concept of the bill is to continue the existing tax bracket or maintain its validity in 2025, and to increase the unified, tax-free income to 700 euros per month (8400 euros per year), which would take effect on January 1, 2026. The budgetary rationale states that a significant tax increase is necessary to cover used reserves and to balance the deficit, and that the tax bracket will, in the short term, cover state budget expenditures, helping to improve the balance and the relative level of GDP. In addition, the package includes various adjustments to limits and expenditures: adjustments for daily allowances for foreign trips, catering for ship and aircraft crews, reception expenses, promotional gifts, and compensation for the use of a personal car, as well as increasing the flexibility of employer-funded healthcare expenses. The changes are planned to take effect on January 1st.
Decisions Made 1
Completion of the first reading regarding draft law no 509, amending the Income Tax Act and the Defence Service Act, and the draft law amending the Income Tax Act. Furthermore, the deadline for submitting amendments to the agenda was set for October 29th at 5:15 PM, and the session was extended until the agenda is exhausted, but no later than 2:00 PM. Voting results: 47 members of the Riigikogu voted in favor, 20 voted against, and 0 abstained.
Most Active Speaker
The most active speaker was Aivar Kokk (Isamaa faction), representing a right-wing political position. He posed successive questions and commented on the changes, highlighting economic policy considerations in the content and explanatory notes of the bill, incorporating perspectives from both the opposition and former ruling parties.
Aseesimees Toomas Kivimägi
AI Summary
The Riigikogu moves on to the second item on the agenda, which is the first reading of Bill 509 concerning the amendment of the Income Tax Act and the Military Service Act, and the amendment of the Income Tax Act. Minister of Finance Jürgen Ligi is invited to deliver a speech.
Rahandusminister Jürgen Ligi
AI Summary
Finance Minister Jürgen Ligi announced a bill submitted to the Riigikogu (Parliament), which maintains a higher income tax rate in 2025 by setting a unified tax-exempt income of 700 euros per month (8,400 euros annually), effective January 1, 2026. This measure is intended to help cover a state budget expenditure of approximately 476 million euros and move the budget closer to balance. Additionally, the bill introduces minor amendments to the maximum limits for compensation related to daily allowances for foreign business trips, accommodation, catering for ship and aircraft crews, and the use of personal vehicles. It also increases the flexibility of employers' reimbursement of healthcare costs and raises the annual limit for health promotion expenses to 400 euros, adding massage and services provided by professionally competent specialists to the list, with these changes also taking effect on January 1.
Aseesimees Toomas Kivimägi
AI Summary
Toomas Kivimägi thanks [the floor/chair] and asks Aivar Kokk to pose the question.
Aivar Kokk
Profiling Isamaa fraktsioonAI Summary
Aivar Kokk thanked the director and the ministers, stating that the draft bill contains flawed figures and raises suspicions of a potential error. The bill mentions that the tax rate for credit institutions' advance payments will be raised from 15% to 18%, but, to his knowledge, the current rate is 14%.
Rahandusminister Jürgen Ligi
AI Summary
He said that he didn't hear the exact percentage.
Aivar Kokk
Profiling Isamaa fraktsioonAI Summary
Aivar Kokk said that the tax rate for credit institutions' advance payments is currently 14%, but there are reports that it will rise to 15–18 percent.
Rahandusminister Jürgen Ligi
AI Summary
Finance Minister Jürgen Ligi stated that he agrees with and strongly supports the elimination of the tax bulge, stressing that he has no dispute regarding this matter.
Aseesimees Toomas Kivimägi
AI Summary
Great thanks are expressed in the address, and it is mentioned that Rain Epler just narrowly made it through.
Rain Epler
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Rain Epler noted that the biggest financial impact next year stems from postponing the abolition of the tax hump, but the explanatory memorandum does not include an approximate cost related to changing per diems and raising other limits, and he asked what orders of magnitude are currently under discussion.
Rahandusminister Jürgen Ligi
AI Summary
The explanatory memorandum notes this: the budget will lose about 2 million from this, but taxpayers will save. Furthermore, the rates have remained unchanged for a long time, and inflation has done its work, so they are being raised.
Aseesimees Toomas Kivimägi
AI Summary
Deputy Chairman Toomas Kivimägi invited Aivar Kokk to the stage.
Aivar Kokk
Profiling Isamaa fraktsioonAI Summary
Aivar Kokk stated that they do not support the income tax exemption for high earners, as its cost is approximately half a billion euros. He then asked for Jürgen’s comment, noting that the good ideas are contained within the explanatory memorandum, not in the text of the bill itself, and that the memorandum is only valid concerning the actual text of the law.
Rahandusminister Jürgen Ligi
AI Summary
Finance Minister Jürgen Ligi stated that the 34% tax increase—referred to as the "tax hump"—for the income bracket of 1200 to 2100 euros is burdensome for taxpayers and must be eliminated to stimulate economic growth and meet budget requirements. He emphasized that any delay would hinder economic growth, adding that while any potential shortcomings in the draft bill would be corrected between the two readings, he believes that the figures and the explanatory memorandum are currently in order.
Aseesimees Toomas Kivimägi
AI Summary
Deputy Chairman Toomas Kivimägi asked Rain Epler to take the floor.
Rain Epler
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Rain Epler agreed that inflation has risen due to the decisions and indecision of the governments led by the Reform Party, and that it is therefore reasonable to change the limits regarding business trips and the use of a personal car. He also added that the impact of the explanatory memorandum on the budget had not been numerically quantified, and this became clearer during the conversation.
Rahandusminister Jürgen Ligi
AI Summary
Finance Minister Jürgen Ligi claims that Estonia’s inflation is primarily caused by the war and energy war waged by Putin’s government, as well as decisions made by previous governments, such as the dismantling of the pension pillar and the budget deficit. He stresses that the Reform Party was neither the initiator nor the proponent of these measures.
Aseesimees Toomas Kivimägi
AI Summary
This is a brief request to invite Arvo Aller.
Arvo Aller
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Arvo Aller asks whether the annual 400-euro health promotion benefit is calculated per person or per employer, and how its use and monitoring are planned in a situation where the employee works half the year in one company and the other half year in another.
Rahandusminister Jürgen Ligi
AI Summary
A fringe benefit is a company expense that is accounted for per employee; although the recipient is an anonymous employee, this is not a personalized calculation and should not become subject to mass monitoring.
Aseesimees Toomas Kivimägi
AI Summary
Toomas Kivimägi invites Andrei Korobeinik to speak.
Andrei Korobeinik
Profiling Eesti Keskerakonna fraktsioonAI Summary
This speech claims that the economic crisis and inflation are caused by Putin's attack on Ukraine, and notes that Estonia is the only EU country whose economy will decline this year, asking whether the impact is strongest in Estonia precisely because of the attack, or if other EU economies are growing due to different reasons.
Rahandusminister Jürgen Ligi
AI Summary
Finance Minister Jürgen Ligi stated that the Estonian economy has suffered during the war due to several factors—its small size, proximity to Russia, vulnerable export structure, and the private sector's loan burden coupled with the effects of Euribor. He added that excessive complaining and spreading negative signals slows down the economy, and therefore, action must be taken to restore economic growth.
Aseesimees Toomas Kivimägi
AI Summary
Deputy Chairman Toomas Kivimägi asks Andrei Korobeinik to present his second question.
Andrei Korobeinik
Profiling Eesti Keskerakonna fraktsioonAI Summary
Korobeinik admits that low birth rates might stem from his statements, but he still hopes they don't, and points out that the economic downturn could be caused by the policies of previous governments, referencing Andrus Ansip's words about looking in the mirror, and asks whether the time for looking in the mirror has arrived now or if it is still ahead.
Rahandusminister Jürgen Ligi
AI Summary
Finance Minister Jürgen Ligi called for an end to the negative atmosphere and blaming, urging focus instead on how everyone could contribute. He emphasized the benefits of a positive attitude for starting families and for entrepreneurship, and noted that the purchasing power of Estonians has grown. He added that he has not blamed individuals, but rather named the major causes of the budget deficit and explained the economic downturn.
Aseesimees Toomas Kivimägi
AI Summary
Deputy Chairman Toomas Kivimägi confirms that this is good and addresses Mart Maastik with a request.
Mart Maastik
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
The current climate raises the question of what kind of positive narrative politicians should be presenting to the public, and what specific steps in the Estonian economy—whether raising taxes or excise duties, or cutting subsidies—would help create a sense of security for families and encourage an increase in the birth rate.
Rahandusminister Jürgen Ligi
AI Summary
Finance Minister Jürgen Ligi said that although the tax hump persists and the purchasing power of real wages might slightly decrease, real pensions and the amount of money remaining for people's use will increase due to the fall in Euribor. He added that Estonia is a free country where one must be specific and responsible, while also noting that the biggest reasons for the tax hike stem from the Russian government and Putin in the Kremlin.
Aseesimees Toomas Kivimägi
AI Summary
Deputy Speaker Toomas Kivimägi invites Anastassia Kovalenko-Kõlvart to take the floor.
Anastassia Kovalenko-Kõlvart
Profiling Eesti Keskerakonna fraktsioonAI Summary
He accuses the government of implementing policies that are causing fear and financial hardship for families, pointing to the increase in VAT and income tax, the excise duties on electricity and fuel, the motor vehicle tax, the reduction of child benefits, and the continuous rise in prices.
Rahandusminister Jürgen Ligi
AI Summary
Finance Minister Jürgen Ligi stated that the negative sentiment and uncertainty are holding back the economy and people's decision-making. Tax increases are an inevitability due to loose fiscal policy and the war. The impact of the taxes is less than 1% of GDP. Next year, the tax burden will be 35.8% of GDP, and compared to the European average, the figures vary (41.1% or 40.2%).
Aseesimees Toomas Kivimägi
AI Summary
Vice-Chairman Toomas Kivimägi calls upon Mart Helme to take the floor.
Mart Helme
Profiling Eesti Konservatiivse Rahvaerakonna fraktsioonAI Summary
Mart Helme posed the rhetorical question of whether Putin's ability to effectively tax the whole of Europe is the correct explanation, pointing to Russia's foreign debt being at its lowest level in history and its strong foreign trade.
Rahandusminister Jürgen Ligi
AI Summary
Finance Minister Jürgen Ligi claims that Putin is effectively taxing all of Europe, and the impact on Estonia is greater than on other countries because our economy is smaller and the border is closer. This proximity necessitates increased defense spending, even though, according to Ligi, Russia's own economy relies heavily on a war footing and oil revenues.
Aseesimees Toomas Kivimägi
AI Summary
Deputy Speaker Toomas Kivimägi announces that Anastassia Kovalenko-Kõlvart will ask the second question.
Anastassia Kovalenko-Kõlvart
Profiling Eesti Keskerakonna fraktsioonAI Summary
He asks who actually governs the country—Prime Minister Michal or Putin—and whether such statements instill fear in people that decisions are being made not by Michal, but due to Putin’s influence.
Rahandusminister Jürgen Ligi
AI Summary
Finance Minister Jürgen Ligi claims that the economic impact of Putin’s war on Estonia exceeds 2% of GDP and can be called a tax. He emphasizes the significance of the economic difficulties caused by the war, explaining that the budget deficit originated during Jüri Ratas’s government when budget rules were changed and the budget was allowed to slip into the negative. He recalls that the last structural surplus was in 2015, and that the deficit has consciously arisen under the cover of various crises, adding, however, that the actual Head of State is Alar Karis.
Aseesimees Toomas Kivimägi
AI Summary
Vice-Chairman Toomas Kivimägi invited Evelin Poolamets to take the floor.
Evelin Poolamets
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Evelin Poolamets points out that Putin is behind all the tax increases, and asks whether he is also responsible for the cost of the renewable energy fee, which drives up the price of energy.
Rahandusminister Jürgen Ligi
AI Summary
Finance Minister Jürgen Ligi notes that Putin is taxing Europe with his war, and this is reflected in Estonia as a drop in GDP. He also stresses that renewable energy is cheaper compared to fossil fuels, and that Europe must be transitioned away from fossil energy via renewable energy subsidies, with investment directed towards affordable energy production.
Aseesimees Toomas Kivimägi
AI Summary
Deputy Speaker Toomas Kivimägi invited Mart Maastik to ask his second question.
Mart Maastik
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Mart Maastik thanks [us] and informs [us] that the minister claimed he did not know my father, and offers to introduce him to his father, since his father is fortunately still alive.
Rahandusminister Jürgen Ligi
AI Summary
Finance Minister Jürgen Ligi apologizes.
Mart Maastik
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Maastik asks if the taxes implemented by Putin are different from those of our immediate neighbors, and if that is the reason why the Estonian economy is falling while our neighbors are seeing growth.
Rahandusminister Jürgen Ligi
AI Summary
Finance Minister Jürgen Ligi said that the decline in exports and uncertainty strongly affect the Estonian economy, as does the structure of our export and economic ties, which does not work to our advantage compared to our neighbors. Furthermore, abandoning Russian energy and the high Euribor, coupled with the private sector's debt burden, increase risks. He added that he apologizes if he used the past tense form of 'father'.
Aseesimees Toomas Kivimägi
AI Summary
No further questions remain; the Chairman of the Finance Committee, Annely Akkermann, will once again present the committee's discussion and decisions to us.
Annely Akkermann
Profiling Eesti Reformierakonna fraktsioonAI Summary
The Finance Committee discussed the impact of Draft Act No. 509 concerning the amendment of the Income Tax Act and the Military Service Act, and the postponement of the abolition of the tax hump, which the minister explained in the overview. The expected impact of this measure next year is 474 million euros (with the VAT impact being 113 million). The committee decided to conclude the first reading and place the draft act on the agenda, along with the appointment of a representative of the lead committee (by consensus, although 7 members who took the initiative voted in favor of the conclusion). The deadline for submitting amendments is ten days, and if the first reading concludes today, the deadline will enter into force on October 29th at 17:15.
Aseesimees Toomas Kivimägi
AI Summary
Toomas Kivimägi thanks the chairman and asks how many were against, noting that seven people voted in favor of concluding the first reading.
Annely Akkermann
Profiling Eesti Reformierakonna fraktsioonAI Summary
Two votes were cast against: Martin Helme and Aivar Kokk. There were no abstentions.
Aseesimees Toomas Kivimägi
AI Summary
Deputy Chairman Toomas Kivimägi thanked the audience, announced that the floor was now open for questions, and invited Aleksandr Tšaplõgin to speak.
Aleksandr Tšaplõgin
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
He asks in the committee why the government takes money from the poor and gives it to the rich.
Annely Akkermann
Profiling Eesti Reformierakonna fraktsioonAI Summary
The postponement of the law's entry into force will increase the tax burden most significantly for people earning a 2,200-euro salary (by about 21.2%), for those earning 1,200 euros by about 9%, and the tax-exempt threshold will be reduced to zero.
Aseesimees Toomas Kivimägi
AI Summary
Vice-Chairman Toomas Kivimägi invites Arvo Aller to the stage.
Arvo Aller
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Arvo Aller asks whether the discussion regarding the draft bill addressed in the committee involved the taxation of Putin and its implementation, and why Annex 1 failed to consider the proposals put forward by interest groups, with the exception of one technical amendment to the government's 2006 regulation.
Annely Akkermann
Profiling Eesti Reformierakonna fraktsioonAI Summary
Annely Akkermann said that the committee did not spend very long discussing this draft bill, and consultation meetings are upcoming, as the target group has sent two letters. One letter proposes adding mindfulness to the list of services for business income as health expenses, and the second, from the Estonian Employers’ Confederation, believes that the list of tax-exempt health promotion services should be expanded to include the services of healthcare professionals and specialists with relevant professional competence, and allow health expenses to be deducted to a greater extent before income tax calculation.
Aseesimees Toomas Kivimägi
AI Summary
Toomas Kivimägi concludes the questions, thanks the participants, and opens the debate, inviting Andrei Korobeinik to speak on behalf of the Estonian Centre Party faction.
Andrei Korobeinik
Profiling Eesti Keskerakonna fraktsioonAI Summary
Rapporteur Andrei Korobeinik criticized the Reform Party's economic policy, emphasizing that during a crisis, the state must help those who are struggling, rather than taking the last money from the poor and distributing it for the benefit of the rich. He further promised not to support the budget next year unless it changes direction.
Aseesimees Toomas Kivimägi
AI Summary
Toomas Kivimägi thanks the audience and then gives the floor to Rain Epler, speaking on behalf of the EKRE faction, so that Epler can rehabilitate himself slightly.
Rain Epler
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Rain Epler criticizes Estonia’s energy policy during this time of crisis, arguing that the flawed green transition and European CO2 trading policy have fueled inflation and economic recession. He further emphasizes that criticism from the opposition and a reassessment of current decisions could ultimately lead to the necessary corrections.
Aseesimees Toomas Kivimägi
AI Summary
Aivar Kokk thanks on behalf of the Isamaa faction.
Aivar Kokk
Profiling Isamaa fraktsioonAI Summary
Aivar Kokk said that the draft bill and the explanatory memorandum are substantively deficient, and that many of the points have already been adopted through previous legislation. He stressed the annual cost of nearly half a billion to the state budget resulting from the income tax exemption for high earners, as well as the multi-billion loss incurred from the sale of electricity, LNG, and wagons due to alleged coalition decisions, and called for these steps to be immediately halted and for focus to shift to real solutions.
Aseesimees Toomas Kivimägi
AI Summary
Deputy Speaker Toomas Kivimägi requested three minutes of additional time for the sitting.
Aivar Kokk
Profiling Isamaa fraktsioonAI Summary
Aivar Kokk emphasized that implementing income tax exemption for high earners makes no sense, and there is no need to raise taxes, because suspending payments into the second pillar would create annual savings of one billion euros. Furthermore, state budget expenditures must be cut, although the draft bill also contains good ideas (e.g., increasing the per diem for long-distance bus drivers), and Isamaa promises to submit further amendments.
Aseesimees Toomas Kivimägi
AI Summary
Toomas Kivimägi announced that the first reading of Bill 509 has been concluded, and the deadline for submitting amendments is October 29th at 17:15. He immediately called for a vote on the Reform Party faction's proposal to extend today's sitting until the agenda is exhausted, but no later than 14:00.
Aseesimees Toomas Kivimägi
AI Summary
The proposal was supported: 47 members of the Riigikogu voted in favor, 20 voted against, and there were no abstentions; the sitting has been extended until the agenda is exhausted, but no later than 2 PM.