First reading of the Draft Act on the Amendment of the Act on Simplified Taxation of Business Income and the Income Tax Act, and the Act on the Repeal of the Security Tax Act and the Amendment of the Income Tax Act (Bill 734 SE)
Session: 15th Riigikogu, 6th Session, Plenary Sitting
Date: 2025-10-13 18:42
Participating Politicians:
Total Speeches: 56
Membership: 15
Agenda Duration: 1h 3m
AI Summaries: 56/56 Speeches (100.0%)
Analysis: Structured Analysis
Politicians Speaking Time
Politicians
Analysis
Summary
The Riigikogu debated the first reading of Draft Bill 734, initiated by the Government of the Republic, concerning the simplified taxation of business income, amendments to the Income Tax Act, and the repeal of the Security Tax Act. The main objective of the bill is to cancel the income tax rate increase to 24% planned by the previous government coalition, leaving the rate at the current level of 22%. Furthermore, the 2% taxation of private individual income starting from the first euro will be dropped, and the tax rate for the business account will be maintained at 20%. Finance Minister Jürgen Ligi emphasized that the changes improve the competitiveness of the tax system and stimulate the economic environment, although they will create a shortfall of nearly 250 million euros in the budget position. Additionally, the income tax exemption for donations made to specific NGOs assisting Ukraine will be extended by two years (until the end of 2027).
During the debate, the opposition (Urmas Reinsalu, Aivar Kokk, Riina Sikkut) criticized the government for deepening the budget deficit and damaging political trust, particularly in connection with the negative net position of foreign investments. The issue of lowering the VAT on foodstuffs was also repeatedly raised (Peeter Ernits), to which Minister Ligi responded with a categorical denial, calling it a foolish and socially misdirected tax policy decision, citing international recommendations. Caution regarding granting tax benefits to NGOs assisting Ukraine was also discussed, as this is a risky area open to abuse.
Decisions Made 2
The first reading of Bill 734 was concluded.
The deadline for submitting amendments was set for October 27 at 5:15 PM.
Esimees Lauri Hussar
AI Summary
Chairman Lauri Hussar announced that the agenda includes the first reading of the substantial tax package initiated by the Government of the Republic (Draft Bill 734), which covers the simplified taxation of business income and the repeal of the security tax, and asked Minister of Finance Jürgen Ligi to present the draft bill to the Riigikogu.
Rahandusminister Jürgen Ligi
AI Summary
Finance Minister Jürgen Ligi introduced a draft bill aimed primarily at revitalizing the economic environment and enhancing competitiveness. The bill achieves this by revoking the tax increases planned by the previous coalition, specifically the proposed hike in the income tax rate to 24% and the 2% taxation of private income starting from the first euro. Furthermore, the current 22% income tax rate and the unified 700-euro tax-free income threshold will remain in force, while the income tax exemption for donations made to aid Ukraine will simultaneously be extended until the end of 2027.
Esimees Lauri Hussar
AI Summary
Chairman Lauri Hussar thanked the minister, noting that there were still questions, and subsequently gave the floor to Peeter Ernits.
Peeter Ernits
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Peeter Ernits acknowledges the bill's brevity and haiku-like form, but criticizes the omission of lowering the VAT on foodstuffs, arguing that its necessity is, in his estimation, significantly greater than the currently debated topics concerning Ukraine donations and tax progression issues.
Rahandusminister Jürgen Ligi
AI Summary
Finance Minister Jürgen Ligi sharply criticizes the idea of reducing VAT on foodstuffs, calling it a foolish and socially misguided tax policy decision. He stresses that the VAT rate plays only a very indirect role in determining final prices, and that the competitiveness of nations depends more on the overall tax burden than on a measure that drains the state budget.
Esimees Lauri Hussar
AI Summary
Chairman Lauri Hussar called Henn Põlluaas to the podium, granting him permission to make a statement.
Henn Põlluaas
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Henn Põlluaas welcomes the cancellation of the income tax hike, seeing it as a measure aimed at revitalizing the economy. Yet, he expresses puzzlement as to why a VAT reduction wouldn't achieve the same outcome. He also casts doubt on why the tax concession designed to aid Ukraine is extended to only eight non-profit organizations (NGOs), emphasizing that a broader tax exemption would allow for much better support for Ukraine.
Rahandusminister Jürgen Ligi
AI Summary
Finance Minister Jürgen Ligi sharply criticizes both the reduction of VAT—which he argues does not improve the economy's competitiveness but is a politically motivated move that international experts (OECD, IMF) strongly advise against—and widespread tax incentives (including those for NGOs), since they are difficult to manage, easily abused, and rarely achieve their actual purpose, meaning they must be implemented with extreme caution.
Esimees Lauri Hussar
AI Summary
Chairman Lauri Hussar invited Aivar Kok to the podium.
Aivar Kokk
Profiling Isamaa fraktsioonAI Summary
Aivar Kokk criticizes the support for the draft bill, which, according to the State Budget Strategy (RES), will create a 264 million euro hole next year, and demands a concrete plan from the government on how this lost revenue will be covered, while also asking why this maneuvering is necessary at all, especially considering the already existing income tax exemption for high earners, which costs half a billion euros.
Rahandusminister Jürgen Ligi
AI Summary
Finance Minister Jürgen Ligi addressed the complexity of managing benefits, noting that an exception had been made due to the war in Ukraine, and defended his tax policy choices, emphasizing that income tax is the most burdensome for the economy. He also sharply criticized the tax hump created by the opposition (Isamaa/Res Publica), calling it an aberration that is an increasingly expensive propagandistic element funded by the budget deficit, rather than a genuine tax policy measure.
Esimees Lauri Hussar
AI Summary
Chairman Lauri Hussar and Jaak Aab were called to the lectern to deliver their presentation.
AI Summary
Jaak Aab is raising the issue of the broader impact of tax policy decisions, criticizing the permanent establishment of the VAT increase and challenging the minister's assertion that it will not damage competitiveness. He points to concerns from the agriculture and food sector, whose assessment is that higher prices will reduce investment and encourage foreign imports.
Rahandusminister Jürgen Ligi
AI Summary
Finance Minister Jürgen Ligi referenced the OECD's position, emphasizing that corporate income tax and labor taxes are the most detrimental to economic growth, whereas VAT has a neutral effect, and land tax, being a tax on a limited resource, actually stimulates the economy, thus pointing to the necessity of redistributing the overall tax burden.
Esimees Lauri Hussar
AI Summary
Chairman Lauri Hussar called Peeter Ernits to the podium, but the actual content of his address is missing from the text that was submitted.
Peeter Ernits
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Peeter Ernits criticized the government, accusing it of resisting the lowering of VAT on foodstuffs—a measure that would help Estonia’s poor and vulnerable—while prioritizing aid to Ukraine over assisting its own population. He also made the ironic suggestion that the "Slava Ukraini" (Glory to Ukraine) slogan should be added to the list of aid scandals currently under investigation, so that someone could continue providing assistance under that banner.
Rahandusminister Jürgen Ligi
AI Summary
Finance Minister Jürgen Ligi rejects political populism and emphasizes the need for better governance, while sharply criticizing the mindset he deems petty—a mindset that pits the negligible cost (a couple of million) of facilitating aid to Ukraine against the massive expense (half a billion) of reducing VAT on food, arguing that Ukraine's survival is absolutely fundamental to Estonia's security.
Esimees Lauri Hussar
AI Summary
Helle-Moonika Helme was called to the speaker's stand by Chairman Lauri Hussar to deliver her presentation.
Helle-Moonika Helme
Profiling Eesti Konservatiivse Rahvaerakonna fraktsioonAI Summary
Helle-Moonika Helme agrees with the minister that tax issues must be handled with extreme caution, but she doubts the government's diligence, pointing out a contradiction: the NGO Estonian Refugee Council (Eesti Pagulasabi), which reported a large profit (nearly 4 million euros), has been included in the list of tax benefit recipients, while other funds that help the Estonian people have been left off. She questions whether sufficient caution was truly exercised when compiling the list.
Rahandusminister Jürgen Ligi
AI Summary
Finance Minister Jürgen Ligi expresses doubt regarding the absence of tax benefits for the Cancer Treatment Fund. He clarifies that in the case of non-profit organizations (NGOs), it is appropriate to speak of income and cash flow, not profit, and defends the salary level of the organization's head (approximately 2,400–2,500 euros), arguing that for a position responsible for a large cash flow in the capital city, this is not generous but rather below average.
Esimees Lauri Hussar
AI Summary
Chairman Lauri Hussar gave the floor to Rain Epler, inviting him to speak.
Rain Epler
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Rain Epler asked the Minister of Finance to confirm that the bill concerning the cancellation of the income tax increase is not merely a pre-election gimmick that will be shelved after Sunday’s elections, but that its processing will be carried through to a certain and successful conclusion, with full conviction and commitment.
Rahandusminister Jürgen Ligi
AI Summary
Finance Minister Jürgen Ligi, who took charge of state finances in July, confirms that this is a draft bill. However, he expresses sharp disappointment regarding the tax elements agreed upon in the coalition agreement (such as taxing all income starting from zero and the parallel taxation of business income), stating that he learned about the painful compromises too late to intervene, even though he should have been supporting them.
Esimees Lauri Hussar
AI Summary
Chairman Lauri Hussar invited Urmas Reinsalu to the podium to begin his presentation.
Urmas Reinsalu
Profiling Isamaa fraktsioonAI Summary
Urmas Reinsalu criticizes the Minister of Finance, stating that the government's 15 months of tax policy uncertainty and inconsistency have damaged confidence in the Estonian economy. This, he argues, has led to a dividend panic and a historically record-high negative net foreign investment position of 3.5 billion euros. He asks directly whether the government's actions were specifically the cause of this catastrophe.
Rahandusminister Jürgen Ligi
AI Summary
Finance Minister Jürgen Ligi accuses the opposition of economic illiteracy and the deliberate manufacturing of a negative mood, charging them with tax policy spasms and misreading balance of payments data. He emphasizes that the net foreign investment position is actually positive, notwithstanding contrary claims that ignore the figures and suffer from methodological deficiencies.
Esimees Lauri Hussar
AI Summary
Chairman Lauri Hussar was Jaak Aab, who was asked to proceed to speak.
AI Summary
Jaak Aab rejected accusations that the Social Democrats were planning widespread tax hikes, clarifying that the SDE has only theoretically discussed implementing a wealth tax and a property tax aimed solely at wealthier individuals to fund national defense investments, while emphasizing that a person's primary residence would remain untaxed.
Rahandusminister Jürgen Ligi
AI Summary
Finance Minister Jürgen Ligi is defending his position that the Social Democrats are behind raising income tax and implementing a 2% parallel tax on businesses, emphasizing that this is a political choice made by their party. He rejects accusations of launching an unfair attack, pointing instead to the opposition leader's previous verbal assault.
Esimees Lauri Hussar
AI Summary
Chairman Lauri Hussar and Urmas Reinsalu were invited to speak.
Urmas Reinsalu
Profiling Isamaa fraktsioonAI Summary
Urmas Reinsalu criticizes the opposing side's emotional reaction to specific data and urgently demands an explanation from the Minister of Finance as to why Estonia was, according to World Bank data in 2024, the only EU country bordering the Baltic Sea whose net foreign investment inflow position was a record negative (–3.5 billion euros), asking what caused this historically large negative fluctuation compared to neighboring countries and previous periods.
Rahandusminister Jürgen Ligi
AI Summary
Finance Minister Jürgen Ligi considers the debate over the alleged massive outflow comical, emphasizing that negative account balances are primarily accounting anomalies resulting from individual transactions (such as the relocation of offices), not a fundamental problem, given that foreign investments are actually increasing. He points out that the accumulation of the budget deficit began already during the time of previous governments due to changes in fiscal rules, which was then exacerbated by crisis expenditures and defense costs that grew under the influence of US foreign policy.
Esimees Lauri Hussar
AI Summary
Chairman Lauri Hussar handed the floor over to Anti Allas.
Anti Allas
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Anti Allas emphasized that, unlike populists, social democrats support taxes aimed at ensuring social equality, and posed a pointed question to the Minister of Finance: whether, in the current security situation, it is ethical and justified to keep the mass purchase of corporate speedboats tax-exempt, allowing the rich to flee in case of war, while leaving national defense to be borne by the poor.
Rahandusminister Jürgen Ligi
AI Summary
Finance Minister Jürgen Ligi criticizes the policy of the Social Democrats. Although they advocate for high taxes to redistribute wealth back to society, they violate their own principles by offering benefits tied to the size of income or consumption and by defending tax exemptions. The poor should be aided not with tax breaks, but by directing the collected funds into public benefits such as education, childcare, and healthcare.
Esimees Lauri Hussar
AI Summary
Chairman Lauri Hussar asked Anti Allas to ask the second question in sequence.
Anti Allas
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Anti Allas posed a brief follow-up question, inquiring whether social democrats are predominantly in power in European countries that have implemented a lower VAT on foodstuffs and a progressive income tax.
Rahandusminister Jürgen Ligi
AI Summary
Finance Minister Jürgen Ligi criticizes populist policies that utilize complex tax exemptions and progressive income tax to conceal the negative impact of redistributive tax systems on European competitiveness. He emphasizes that a simple, exception-free VAT system (following the Danish example) treats people more fairly and harms the economy less, while simultaneously avoiding the "circus" of subsidies and benefits, the majority of which the wealthy end up claiming for themselves.
Esimees Lauri Hussar
AI Summary
Chairman Lauri Hussar thanked the minister, thereby concluding the round of questions, and then gave the floor to his colleague Aivar Sõerd so that he could present, from the Riigikogu rostrum, the discussion that had taken place in the Finance Committee.
Aivar Sõerd
Profiling Eesti Reformierakonna fraktsioonAI Summary
Aivar Sõerd provides a report on the sitting of the Riigikogu Finance Committee held during the preparation of Draft Bill 734. The discussion centered on the economic impact of scrapping the planned income tax increase and on international tax competition, particularly concerning corporate income tax. Both the minister and the speaker emphasized the necessity of preventing capital outflow and stimulating the economy, despite colleagues' doubts regarding the potential increase in the budget deficit. The committee subsequently decided to conclude the first reading of the draft bill.
Esimees Lauri Hussar
AI Summary
Chairman Lauri Hussar thanked the presenter for the presentation and then gave the floor to Rain Epler to begin the Q&A session.
Rain Epler
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Rain Epler demands clear confirmation from Aivar and a guarantee of coalition consensus that the bill currently under discussion will be fully enacted into law even after the elections, thereby avoiding a situation where it turns out to be merely an electoral promise of tax relief that later stalls.
Aivar Sõerd
Profiling Eesti Reformierakonna fraktsioonAI Summary
Aivar Sõerd emphasizes that, regardless of any potential digressions from the committee discussions, the coalition is determined to finalize the first reading of the bill today. This is crucial for guaranteeing the competitiveness of the economy, ensuring people can manage financially, and supporting overall development, which is why the bill deserves rapid backing and enactment into law.
Esimees Lauri Hussar
AI Summary
Chairman Lauri Hussar thanked the rapporteur, closed the question period, and opened the debate, inviting colleague Urmas Reinsalu to the Riigikogu rostrum on behalf of the Isamaa faction, and requested an additional three minutes for him.
Urmas Reinsalu
Profiling Isamaa fraktsioonAI Summary
Urmas Reinsalu accuses the government of a bungling fiscal policy that is eroding economic confidence, citing the cancellation of the security tax and the historically negative net foreign investment position as examples. He argues that these actions have dragged Estonia's competitiveness down to the level of Iraq. He stresses that the Reform Party's budget strategy, which forecasts an irresponsible 4.5% deficit until 2027 and beyond, is wrecking the nation's finances and, in reality, means that new tax hikes are being baked into the strategy. Therefore, he concludes, a fundamental correction of the government's policy and the finding of alternatives are necessary.
Esimees Lauri Hussar
AI Summary
Speaker Lauri Hussar invited Rain Epler to the Riigikogu rostrum on behalf of the faction of the Estonian Conservative People's Party.
Rain Epler
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Rain Epler sharply criticized the Social Democrats' tax policy, stressing that their desire to introduce several new taxes—such as car, property, and progressive income tax—will actually hit rural residents and lower-income individuals the hardest, rather than the wealthy. He further emphasized that people should be able to use the money they earn freely and without restrictions.
Esimees Lauri Hussar
AI Summary
Chairman Lauri Hussar offered thanks and, on behalf of the Social Democratic Party faction, invited colleague Riina Sikkut to the Riigikogu podium.
Riina Sikkut
Profiling Sotsiaaldemokraatliku Erakonna fraktsioonAI Summary
Riina Sikkut sharply criticizes the government's short-sighted and reckless budget policy, which exacerbates the already low level of trust in political institutions. She highlights the coalition's broken promises and its irresponsibility regarding state finances. She particularly condemns the bill currently under discussion, which abolishes the income tax 'hump' while disregarding budget neutrality, and uses borrowed money to cut taxes. This is unprecedented and populist in Estonia, primarily serving higher-income earners, irresponsibly increasing the debt burden, and jeopardizing the country's credit rating.
Esimees Lauri Hussar
AI Summary
Chairman Lauri Hussar, satisfied that there were no further general requests to speak, established the order of the remaining speakers, granting priority to Minister Jürgen Ligi, followed by Anti Allas for a response to Rain Epler.
Rahandusminister Jürgen Ligi
AI Summary
Finance Minister Jürgen Ligi slammed Urmas Reinsalu, accusing him of failing to address specific tax changes in his speech and instead focusing on simply criticizing the government. Ligi warned that such irrelevant and populist tactics pose a danger to the political landscape and could lead to the collapse of the party, recommending that Reinsalu stick to the arguments and the topic of the draft legislation.
Esimees Lauri Hussar
AI Summary
Chairman Lauri Hussar thanked the previous speaker and then gave the floor to Anti Allas for a response statement.
Anti Allas
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Anti Allas is accusing his colleague Rain Epler of dishonest and "lame" behavior during the Võru local elections, charging him with putting words into a competitor’s mouth and predicting that voters will soon deliver a negative judgment on such an ugly lying tactic.
Esimees Lauri Hussar
AI Summary
Chairman Lauri Hussar concluded the discussions with words of thanks and, before continuing the session, gave Peeter Ernits the opportunity to ask a question regarding the procedure of the sitting.
Peeter Ernits
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Peeter Ernits criticized the prevailing "constant sniping" and the absence of key stakeholders at the session, arguing that this hinders substantive discussion and leads to miscommunication. He proposed improving the rules of procedure through small changes introduced at shorter intervals, in order to prevent procedural violations and enhance the management of the session.
Esimees Lauri Hussar
AI Summary
Speaker Lauri Hussar explained that amending the Riigikogu Rules of Procedure and Internal Rules Act is a complex process that requires a consensus agreement among the parliamentary groups, and he emphasized that, as the presiding officer of the session, he cannot establish rules mandating attendance in the chamber but must rely on the diligence of the Riigikogu members during the debate; he then closed the discussions and set the deadline for submitting amendments.