Draft law amending the Income Tax Act (566 SE) – First Reading
Session: 15th Estonian Parliament, 5th session, plenary session
Date: 2025-04-09 18:39
Participating Politicians:
Total Speeches: 75
Membership: 15
Agenda Duration: 1h 4m
AI Summaries: 75/75 Speeches (100.0%)
Analysis: Structured Analysis
Politicians Speaking Time
Politicians
Analysis
Summary
The Riigikogu debated the first reading of Bill 566, a draft act amending the Income Tax Act initiated by the faction of the Estonian Conservative People's Party (EKRE), which is also known as the banking tax bill. Rapporteur Rain Epler (EKRE) explained that the bill's objective was not to tax banks retrospectively, but rather to establish a framework that would prevent credit institutions from earning extraordinary profits during future interest rate rally periods by passing the interest rate hike solely onto borrowers while excluding depositors. Epler emphasized that such activity constitutes "predatory capitalism" and highlighted Lithuania as a positive example, noting that a similar measure there had generated significant revenue for the state treasury.
Aivar Sõerd (Reform Party), representing the leading body, the Finance Committee, presented the committee's proposal to reject the bill. Sõerd pointed out that the government does not support the bill, arguing that interest rates are already on a downward trend, which makes the bill's primary goal (budgetary revenue collection) unlikely. He also stressed that the Estonian banking sector already pays advance income tax (18%) and final income tax (22% upon dividend distribution), which is higher than the rest of the business sector. Furthermore, a legal issue was raised in the committee: the three-year profit comparison base used for taxation might violate the constitution due to retroactive taxation. The opposition sharply criticized the coalition's refusal to tax the banking sector's extraordinary profits, viewing it as favoring bankers over the common people. Following the vote, the bill was rejected.
Decisions Made 1
Bill 566 (the draft act amending the Income Tax Act) was rejected in the first reading (46 in favor, 20 against).
Most Active Speaker
Rain Epler (EKRE) was the most active speaker, presenting the draft legislation, defending his faction's initiative, and responding to numerous questions. He holds a right-wing position.
Aseesimees Arvo Aller
AI Summary
The deputy speaker Arvo Aller presides over the second item on the agenda, where the EKRE faction's draft law to amend the Income Tax Act, bill No. 566, will have its first reading, and the presenter is Rain Epler.
Rain Epler
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Rain Epler thanks the chair of the meeting and his colleagues and presents a draft bill, the content of which is, in itself, short and simple.
Aseesimees Arvo Aller
AI Summary
The vice-chairman Arvo Aller asked the members of the Riigikogu to listen to the presenter and announced that if anyone wishes to speak, it must be done in the corridor, and this applies to all factions as well as to independents.
Rain Epler
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Rain Epler presents a bank tax bill, under which the arising extraordinary bank profits would be taxed or interest would be adjusted so that extraordinary profits would not arise, and he emphasizes that this is about creating a framework, points to Lithuania as an example, and invites the coalition to lay down this framework.
Aseesimees Arvo Aller
AI Summary
The vice-chairman thanked and invited questions, giving Evelin Poolamets the floor.
Evelin Poolamets
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Evelin Poolamets lauds the draft, highlights the problem of response speed, and provides an example of Swedbank's profit: 272 euros per Estonian customer, 233 euros per Swedish customer, and 213 euros per Latvian customer, and asks whether the draft helps create a balance so that big banks treat customers more equally.
Rain Epler
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Rain Epler stressed that a framework must be established that makes banks' robbery of customers unacceptable, and that competition and foreign banks will provide cheaper and better service, something people should show exists in the neighborhood as better financial institutions.
Aseesimees Arvo Aller
AI Summary
Vice-chairman Arvo Aller asks Aivar Sõerd to take the floor.
Aivar Sõerd
Profiling Eesti Reformierakonna fraktsioonAI Summary
Aivar Sõerd criticized the claim in the explanatory memorandum of the draft that interest rates will stay high or may rise and that, therefore, revenue growth should be expected by the end of the year, pointing out that the ECB has cut rates since June 2024 and that, according to economists, there are two more cuts ahead (as Reuters wrote), and he asked whether the topic has even been properly worked through at all.
Rain Epler
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Rain Epler stated that at the moment a sharp rise in interest rates is not topical, and the issues have been thought through and the framework is being laid out calmly, and if a rise were to come as in 2023, a message has already been given to banks that the rise must not be passed on to borrowers immediately but to depositors, which he calls predatory capitalism, and he does not agree with the claim that this sentence is in any way unusually prominent.
Aseesimees Arvo Aller
AI Summary
The vice-chairman Arvo Aller asks Vadim Belobrovtsev to take the floor.
Vadim Belobrovtsev
Profiling Eesti Keskerakonna fraktsioonAI Summary
The opposition has submitted bills for a bank tax, at a time when Euribor was high and banks earned up to one billion euros in annual profit, but the coalition has not paid attention to this, although new taxes were imposed, family benefits were reduced, and the tax rate was increased.
Rain Epler
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Rain Epler notes that although there is no doubt, there is hesitation, and the coalition does not want to address the topic, which may be related to a meeting held by former prime minister Kaja Kallas and the leaders of Estonian banks, and after which the leaders who left Stenbock House showed overflowing joy, but what promises were given and whether any were given at all remains unknown as of today.
Aseesimees Arvo Aller
AI Summary
The vice-chairman Arvo Aller asks Anti Poolametsa to speak.
Anti Poolamets
Profiling Eesti Konservatiivse Rahvaerakonna fraktsioonAI Summary
Anti Poolamets accuses the Reform Party of a birth trauma related to banks, recalls a $10 million trip with Siim Kallas, and, in light of Lithuania's experience, notes that banks operate and the state treasury receives money, and that the car tax could have been avoided.
Rain Epler
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Rain Epler claims that if Estonia had responded as decisively as Lithuania, the changes made to the car tax and to the support for large families would most likely have remained undone; he praises Lithuania for its economic policy and criticizes the Reform Party, which seems to care more about foreign interests than about its own country and its people.
Aseesimees Arvo Aller
AI Summary
The vice-chairman Arvo Aller invites Lauri Laats to speak.
Lauri Laats
Profiling Eesti Keskerakonna fraktsioonAI Summary
Lauri Laats noted that the return on equity of Estonia's commercial banks is higher than that of Scandinavian private-capital-based banks, and although, in turbulent times, the Euribor rate was raised and bank managers visited the prime minister of the time with hope, that decision did not materialize, and at the same time the banks' profits and return on equity grew.
Aseesimees Arvo Aller
AI Summary
Vice Chairman Arvo Aller emphasizes that it is time for you to act.
Lauri Laats
Profiling Eesti Keskerakonna fraktsioonAI Summary
The government did nothing to ensure that banks would take joint responsibility and promote an improvement in the country's situation.
Aseesimees Arvo Aller
AI Summary
This is Vice-Chairman Arvo Alleri's very short address, which invites listeners to submit their question.
Rain Epler
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
He claims that the government not only failed to do enough, but did nothing at all — even the messages were non-existent or backwards.
Aseesimees Arvo Aller
AI Summary
This is the speech by Vice-Chairman Arvo Alleri, in which Aivar Sõerd is asked to come.
Aivar Sõerd
Profiling Eesti Reformierakonna fraktsioonAI Summary
The rapporteur Aivar Sõerd believes that the aim of the bill to tax the growth of net interest income is based on the last three years, but since 2023 Euribor has fallen and is likely to continue a downward trend, therefore the bill will not bring any revenue in the near future, and he asks when this revenue would be collected and what would be the scenario in which Euribor would rise rapidly from 0% to 4%.
Rain Epler
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
We will set up for banks a calm and predictable framework that, in the event of an extraordinary rise in interest rates, would not leave the burden solely on borrowers, but would balance it in favor of depositors, and we are doing this now so that the state would be in a better position in the future — if we had reacted as quickly as Lithuania, the state budget revenues would already have been received.
Aseesimees Toomas Kivimägi
AI Summary
The vice-chairman Toomas Kivimägi invites Mart Helmet to speak.
Mart Helme
Profiling Eesti Konservatiivse Rahvaerakonna fraktsioonAI Summary
Mart Helme expressed deep concern that the world could reach the collapse of the financial system, and the international financial landscape could wind the taxi meter back to zero, there could come Bretton Woods agreements or a gold standard, and in that case Estonia's tax system would collapse, for which Estonia is absolutely not prepared, and he pointed out that during Siim Kallas's tenure Estonia's gold reserves were sold off for dubious value and for non-existent shares.
Aseesimees Toomas Kivimägi
AI Summary
He thanks.
Mart Helme
Profiling Eesti Konservatiivse Rahvaerakonna fraktsioonAI Summary
Mart Helme asks what can be said about the Estonian economy and the financing of the state, and whether he has considered a theoretical construct, adding that this is a very speculative question.
Aseesimees Toomas Kivimägi
AI Summary
The vice-chairman, Toomas Kivimägi, thanked his colleague.
Rain Epler
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Rain Epler said that the situation is so turbulent that making forecasts is difficult, and he discussed banking regulation under which the state would not tolerate usury, adding that if necessary, he will involve Aivar and will await interesting forecasts from Mart.
Aseesimees Toomas Kivimägi
AI Summary
The deputy chairman Toomas Kivimägi invites Kalle Grünthal to the tribune.
Kalle Grünthal
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Kalle Grünthal asked the presenter to briefly and clearly justify why the draft amendment to the Income Tax Act is necessary for Estonia.
Rain Epler
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
This speech expresses the view that in the future, during periods of rapidly rising interest rates, banks must not give rise to predatory capitalism or usury, where the rise in interest is passed on only to borrowers and depositors remain untouched.
Aseesimees Toomas Kivimägi
AI Summary
The vice-chairman, Toomas Kivimägi, invited Martin Helme to take the floor.
Martin Helme
Profiling Eesti Konservatiivse Rahvaerakonna fraktsioonAI Summary
Martin Helme claims that his bill follows the same idea as Trump, focusing on the middle class and working people, and asks rhetorical questions: is the banks' situation so crazy that they could not be taxed, and would the economy really suffer?
Rain Epler
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Rain Epler said briefly that people lie, referring to Lithuania as an example, and stressed that entrepreneurs' profits must not be taxed, and the draft sets clear operating frameworks for banks, although the Reform Party has recently come to its senses and does not want corporate income tax for all companies.
Aseesimees Toomas Kivimägi
AI Summary
At the end of the speech, thanks are given, and it is requested that, for the lead committee's briefing, Aivar Sõerd, a member of the Riigikogu's Finance Committee, be presented at the Riigikogu's podium.
Aivar Sõerd
Profiling Eesti Reformierakonna fraktsioonAI Summary
The Riigikogu Finance Committee discussed the preparation of the draft bill for the first reading, decided on 8 April to place it on the agenda, to designate as the lead committee's representative the speaker for this, and to reject the draft bill at the first reading, because the government did not support it; the discussion highlighted questions about the suitability of the tax system, retroactivity, and the impact on the banking sector, as well as the critical importance of Euribor projections.
Aseesimees Toomas Kivimägi
AI Summary
This speech was a thank-you address, which invited a few questions and asked Lauri Laats to step up to the podium.
Lauri Laats
Profiling Eesti Keskerakonna fraktsioonAI Summary
Speaker Lauri Laats states that if the Reform Party does not agree to a bank tax, the problem is that banks' high return on equity does not translate into the desired reduction of interest rates, and during periods when EURIBOR was high the base rates were not changed, and the task is to create conditions under which interest rates would fall, which has also been recommended by the President of the Bank of Estonia.
Aseesimees Toomas Kivimägi
AI Summary
That was a short expression of thanks.
Lauri Laats
Profiling Eesti Keskerakonna fraktsioonAI Summary
Switching banks is very expensive because mortgages, loan agreements, and appraisals are involved.
Aseesimees Toomas Kivimägi
AI Summary
The vice-chairman Toomas Kivimägi says that, dear colleague, your time is up.
Lauri Laats
Profiling Eesti Keskerakonna fraktsioonAI Summary
I'll just give one example: mobile service providers were operating at the time the law was passed.
Aseesimees Toomas Kivimägi
AI Summary
Deputy Speaker Toomas Kivimägi said that he cannot allow the question to drag on unacceptably long, and added that you probably have one more question up your sleeve.
Aivar Sõerd
Profiling Eesti Reformierakonna fraktsioonAI Summary
Aivar Sõerd stresses that the topic of the banking system is broad and complex, and the part of this draft bill dealing with changing the mobile operator goes far beyond that, and he adds that after his presentation negotiations will begin and the political parties will be able to express their positions more broadly.
Aseesimees Toomas Kivimägi
AI Summary
The vice-chairman Toomas Kivimägi asks Martin Helmet to speak.
Martin Helme
Profiling Eesti Konservatiivse Rahvaerakonna fraktsioonAI Summary
Martin Helme thanks Aivar for providing very clear overviews of the committee's work, and asks how EURIBOR is moving — whether it will rise, fall, or stay the same — which is important in the context of the law.
Aivar Sõerd
Profiling Eesti Reformierakonna fraktsioonAI Summary
According to current analysts' expectations, there is a broad consensus that the European Central Bank will cut rates by 0.25 percentage points in the coming week, and two more cuts this year and in the next six months, which could bring the Euribor down to around 2%. However, the situation is turbulent and forecasts are uncertain.
Aseesimees Toomas Kivimägi
AI Summary
This is a short and polite request to Rain Epler.
Rain Epler
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Rain Epler asks Aivar whether it would be possible to establish a framework for banks under which, at the next rapid interest-rate hike, the increase would not be passed on to borrowers immediately, but would remain with the banks, and whether such a solution would be sensible to implement with the help of a draft bill or not.
Aivar Sõerd
Profiling Eesti Reformierakonna fraktsioonAI Summary
I think this is not reasonable because you want to copy exactly a framework from Lithuanian practice, and Euribor’s heyday is already in the past, and it was implemented in Lithuania in 2022–2024, but our context is very different and the banks’ tax burden is higher, while in Lithuania taxes are lower—therefore I do not support such a framework and your preparation is incomplete.
Aseesimees Toomas Kivimägi
AI Summary
There was no response to the praise, and Mart Maastikku is asked to perform.
Mart Maastik
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Mart Maastik noted that an instrument designed to curb inflation could be useful, but asked whether it is right that the money would flow into the pocket of a single private company in managing inflation, and not be distributed among depositors.
Aseesimees Toomas Kivimägi
AI Summary
In the speech, great thanks were expressed to a good colleague.
Mart Maastik
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
They want some of this money to go to the state treasury, so that something useful could be done with it.
Aivar Sõerd
Profiling Eesti Reformierakonna fraktsioonAI Summary
Aivar Sõerd emphasizes that taxation must not be built on a favorable economic climate or on extraordinary profits, and the tax system must not be continually changed over time in line with fluctuations in the economic cycle.
Aseesimees Toomas Kivimägi
AI Summary
The vice-chair asks Varro Vooglaid to come onto the stage.
Varro Vooglaid
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Varro Vooglaid criticizes the government, saying that, due to a lack of money, they will go after subsidies for large families, the property of car owners, the raising of the land tax, and homeowners’ property, and he calls on others to copy Lithuania’s functioning financing scheme, which has brought the necessary funds into the state budget to strengthen security.
Aivar Sõerd
Profiling Eesti Reformierakonna fraktsioonAI Summary
If you want to copy something, you need to take all aspects into account: tax systems differ, Lithuania's personal income tax is much lower and has risen by only one percentage point to 16%, and commercial banks are subject to a special taxation — 18% as an advance tax —, so before copying it's worth considering various factors.
Aseesimees Toomas Kivimägi
AI Summary
The vice-chairman Toomas Kivimägi invited Varro Vooglaidi to speak.
Varro Vooglaid
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Varro Vooglaid asks whether in Lithuania the corporate income tax is 16% and we have an 18% advance income tax, and emphasizes that the difference is not conceptually large and that the Lithuanian solution may not suit us.
Aivar Sõerd
Profiling Eesti Reformierakonna fraktsioonAI Summary
Aivar Sõerd thanks for the question and notes that there is indeed a fundamental difference between us.
Aseesimees Toomas Kivimägi
AI Summary
The speech emphasizes that the presenter's remark was not appropriate.
Aivar Sõerd
Profiling Eesti Reformierakonna fraktsioonAI Summary
Aivar Sõerd said that we have a general income tax rate of 22% and commercial banks also pay advance income tax on earned profits, which does not apply to the rest of the business sector.
Aseesimees Toomas Kivimägi
AI Summary
The deputy chairman Toomas Kivimägi turns to Anti Allas and asks him.
Anti Allas
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
The presenter asks a specialist why commercial banks in Estonia do not offer loans with a fixed margin, asks for the reason and an opinion, and notes that elsewhere in Europe it is possible to tie loans to Euribor or to take long-term fixed-interest loans, for example a 30-year loan.
Aivar Sõerd
Profiling Eesti Reformierakonna fraktsioonAI Summary
The topic was not discussed in the committee, but the news mentioned, according to EfTEN's representative, that Euribor has fallen and that now is the right time to fix the interest rate, therefore there is such a product.
Aseesimees Toomas Kivimägi
AI Summary
Toomas Kivimägi thanked, said that there were no questions, opened negotiations, and, on behalf of the Estonian Centre Party faction, Lauri Laats asked for extra time—eight minutes to speak.
Lauri Laats
Profiling Eesti Keskerakonna fraktsioonAI Summary
Lauri Laats emphasizes that competition among banks must improve, among other things by reducing the costs of transferring a loan agreement to another bank (valuation report, notary fees, termination of the loan agreement), so that customers can easily switch banks and interest rates would fall, and he points to the solutions in Finland and Sweden and the need to consider the issue of a banking tax if competition is not otherwise improved.
Aseesimees Toomas Kivimägi
AI Summary
Toomas Kivimägi thanks and invites Martin Helme to speak on behalf of the EKRE faction, and at the same time asks whether the presiding officers may in the future use the abbreviation EKRE.
Martin Helme
Profiling Eesti Konservatiivse Rahvaerakonna fraktsioonAI Summary
Martin Helme believes that although the coalition burdens ordinary people and cuts public services, an extraordinary bank tax must be introduced, because banks remain untaxed and that, in his view, is despicable.
Aseesimees Toomas Kivimägi
AI Summary
Deputy Chairman Toomas Kivimägi announced that the leading committee intends to reject draft bill 566 at its first reading and called on his colleagues to vote.
Aseesimees Toomas Kivimägi
AI Summary
The Estonian Parliament supported Bill 566, with 46 in favor, 20 against and 0 abstentions; the bill has been rejected and is no longer under consideration.