Draft law amending the Value Added Tax Act (596 SE) – First Reading
Session: Fifteenth Riigikogu, Fifth Session, Plenary Session.
Date: 2025-05-22 00:44
Participating Politicians:
Total Speeches: 69
Membership: 15
Agenda Duration: 55m
AI Summaries: 69/69 Speeches (100.0%)
Analysis: Structured Analysis
Politicians Speaking Time
Politicians
Analysis
Summary
We have reached the last item on the agenda: the first reading of the draft law amending the Value Added Tax Act, initiated by the Conservative People's Party of Estonia faction, number 596. The draft's aim is to lower the value added tax rate from 22% to 20%, which, along with opposing arguments, was presented as a way to reduce inflation, preserve purchasing power, and stimulate economic growth. It was also pointed out that, through a fairer tax system, lower input costs, and a better business environment, both citizens and businesses could become more resilient. It’s bold to say that the budgetary policy impacts are favorable in the long term, although initial revenue may fall and require substitute measures. The draft law stipulates a coming into force date of January 1, 2026, which provides a significant amount of time for adaptation and preparations.
The topic was accompanied by broader discussions between parties: the Reform Party, Estonia 200, and the Social Democrats voiced criticism regarding the tax increase and the budget's sustainability, while the Conservative People's Party and its allies considered the reduction to be correct and necessary to reduce price pressure on citizens. Speeches and comments followed from several colleagues, encompassing both the long-term impacts of the tax changes and international comparisons. Overall, the agenda was characterized by strong government and opposition interaction and a deep discussion on how taxes affect the standard of living and the state's accounting.
Decisions Made 1
Following the first reading of Bill 596, a decision was made to reject the bill: during the first reading, a proposal by the steering committee to terminate the procedure by rejecting the bill was adopted. The vote resulted in 37 in favor, 10 against, and 0 abstentions. Consequently, the bill is removed from the procedure.
Most Active Speaker
The most active speaker was pid Nm6t5Eds7aw, a member of the EKRE faction; he represents the right-wing political line.
Aseesimees Toomas Kivimägi
AI Summary
The first reading of Bill No. 596, the draft act amending the Value Added Tax Act, initiated by the EKRE faction, is taking place today. Siim Pohlak is the rapporteur.
Siim Pohlak
Profiling Eesti Konservatiivse Rahvaerakonna fraktsioonAI Summary
Siim Pohlak submits a draft bill to lower the Value Added Tax (VAT) from 22% to 20%. He argues that this measure will alleviate inflation, increase purchasing power, stimulate the economy and the business environment, and boost tax revenue in the long term, provided the law takes effect on January 1, 2026.
Aseesimees Toomas Kivimägi
AI Summary
The Vice-Chair thanks the audience and invites Evelin Poolamets to ask a question.
Evelin Poolamets
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Evelin Poolamets emphasizes that the VAT increase disproportionately affects low-income individuals, exacerbates social inequality, and questions the Reform Party regarding their objectives when imposing such a burden.
Siim Pohlak
Profiling Eesti Konservatiivse Rahvaerakonna fraktsioonAI Summary
Siim Pohlak accuses the Reform Party of unjust economic policy, claiming that their reduction of family benefits, the abolition of tax brackets, and the rise in VAT increase inequality because the wealthy, and even members of the Riigikogu, receive more money while the poorer segment of Estonia suffers.
Aseesimees Toomas Kivimägi
AI Summary
This is simply a request to Martin Helme.
Martin Helme
Profiling Eesti Konservatiivse Rahvaerakonna fraktsioonAI Summary
Martin Helme is criticizing the Reform Party's plan to make the temporary VAT increases permanent. He is initially demanding the return of the 20% rate and argues that economic growth brings revenue to the state budget, but warns that soon people will start claiming that merchants are simply pocketing the cash.
Siim Pohlak
Profiling Eesti Konservatiivse Rahvaerakonna fraktsioonAI Summary
Siim Pohlak claims that the Reform Party has essentially increased the value-added tax (VAT) by about 6% over the course of 15 years, which he says is a European record. Meanwhile, other countries are lowering taxes, including the VAT on foodstuffs. The Merchants’ Association emphasizes that tax reductions are highly anticipated and that market competition is fierce, meaning these changes would certainly impact prices.
Aseesimees Toomas Kivimägi
AI Summary
Deputy Chairman Toomas Kivimägi invited Lauri Laats to speak.
Lauri Laats
Profiling Eesti Keskerakonna fraktsioonAI Summary
Lauri Laats stated that consumption taxes disproportionately burden low-income individuals and hinder the economic environment and business development, and that a review of these taxes is necessary—a point also emphasized by the European Commission, the OECD, and the IMF—because the share of consumption taxes in budget revenues is higher than in other European countries.
Siim Pohlak
Profiling Eesti Konservatiivse Rahvaerakonna fraktsioonAI Summary
Siim Pohlak claims that the people of the Reform Party have been in power for two decades or longer, and they lack a real understanding of Estonian business and people's daily lives. Consequently, they make wrong decisions that worsen the situation, and they only fight for their own incomes, leaving the rest of the Estonian people out in the cold.
Aseesimees Toomas Kivimägi
AI Summary
Deputy Speaker Toomas Kivimägi invites Helle-Moonika Helme to come forward and speak.
Helle-Moonika Helme
Profiling Eesti Konservatiivse Rahvaerakonna fraktsioonAI Summary
He criticizes the Reform Party and the oversight of e-elections, claiming that the VAT increase will raise prices, leave people with less money, and consequently, the state will ultimately collect less tax revenue.
Siim Pohlak
Profiling Eesti Konservatiivse Rahvaerakonna fraktsioonAI Summary
Siim Pohlak stated that there are no winners in the Reform Party's tax frenzy: first, businesses and jobs lose out, then people suffer, and finally, tax revenues fall and the state loses.
Aseesimees Toomas Kivimägi
AI Summary
Deputy Speaker Toomas Kivimägi turns to Martin Helme and says, "Please."
Martin Helme
Profiling Eesti Konservatiivse Rahvaerakonna fraktsioonAI Summary
Martin Helme claims that the Reform Party is dishonest, and the effect of tax cuts manifests only through competition, as seen when excise duties on alcohol and fuel were lowered, causing prices to drop due to fierce competition. The key is competition, not state regulation.
Siim Pohlak
Profiling Eesti Konservatiivse Rahvaerakonna fraktsioonAI Summary
Siim Pohlak argues that tax increases are burdening entrepreneurs, tax-free Fridays, Saturdays, and Sundays have disappeared, and he accuses the Reform Party of constantly lying about the issue of taxation.
Aseesimees Toomas Kivimägi
AI Summary
Varro Vooglaid is invited to speak.
Varro Vooglaid
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Varro Vooglaid argues that the tax hikes lack a popular mandate, and therefore the decisions are undemocratic, especially since the constitution does not allow for a referendum on taxes. He recommends holding either a tax referendum or snap elections in order to secure the people's mandate for the tax increases and reduce the societal divide.
Siim Pohlak
Profiling Eesti Konservatiivse Rahvaerakonna fraktsioonAI Summary
Siim Pohlak stated that Estonia should have more referendums and direct democracy, criticized the current government, and stressed the necessity of snap elections, arguing that a significant part of the population currently desires them because they are unhappy with how the government is managing affairs.
Aseesimees Toomas Kivimägi
AI Summary
Deputy Chairman Toomas Kivimägi invited Evelin Poolamets to come and speak.
Evelin Poolamets
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
The VAT doesn't just affect Estonian people, but also has a very significant impact on tourism, and the resulting price increase could deter tourists—for example, Finns—who come here because of the cheap prices.
Siim Pohlak
Profiling Eesti Konservatiivse Rahvaerakonna fraktsioonAI Summary
Siim Pohlak says that we are losing not only good Finnish tourists, but also that many Estonians work in Finland and buy groceries there to bring back to Estonia, because prices in Finland are cheaper and many services are already more affordable. Furthermore, under the leadership of the Reform Party, we are becoming the most expensive country in the Baltic Sea region.
Aseesimees Toomas Kivimägi
AI Summary
Deputy Speaker Toomas Kivimägi makes a brief request: "Leo Kunnas, please!"
Leo Kunnas
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Leo Kunnas claims that the tax hike is coming not from the government, but from Putin. He gives the example that taxes remain balanced in Latvia while they are falling in Finland, and then asks Siim whether the tax policy of a dictatorship doesn't differ from that of its neighbors.
Siim Pohlak
Profiling Eesti Konservatiivse Rahvaerakonna fraktsioonAI Summary
Siim Pohlak claims that the Reform Party is pro-Russian, and that their tax policy and e-voting system resemble Putin's Russia. He believes that the truth of this was also revealed in an unintentional comment made by Jürgen Ligi.
Aseesimees Arvo Aller
AI Summary
Vice-Chairman Arvo Aller announces that there are no further questions and invites everyone to listen to the presentation by Annely Akkermann, Chairman of the Finance Committee.
Annely Akkermann
Profiling Eesti Reformierakonna fraktsioonAI Summary
The Finance Committee discussed preparations for the first reading of the draft bill. It decided not to support the bill, citing the government's justification regarding the replacement of the missing 260 million euros in tax revenue and the transmission of the tax reduction to consumer prices. The Committee maintained the procedural directions for the bill (it will be taken to the plenary session and placed on the agenda for May 21st), while simultaneously deciding to reject the bill (by 5 votes). Finally, Rain Epler presented the bill's objective succinctly.
Aseesimees Arvo Aller
AI Summary
Deputy Chairman Arvo Aller thanks [the previous speaker/assembly] and calls upon Lauri Laats to ask a question.
Lauri Laats
Profiling Eesti Keskerakonna fraktsioonAI Summary
Lauri Laats highlighted that taxes reflect value judgments, and the Estonian tax system means that the weakest pay the most, and he asked the commission member if they agreed with that.
Annely Akkermann
Profiling Eesti Reformierakonna fraktsioonAI Summary
Annely Akkermann claims that the weakest do not pay more, because people with the lowest income fall below the income tax threshold, and a large portion of their income comes from tax-exempt social benefits, which are financed by taxes already collected. Furthermore, she disagrees with the assertion that it is precisely those with the lowest incomes who pay the most in Estonia.
Varro Vooglaid
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Varro Vooglaid asks a long-time financial specialist what would happen if the VAT rate were lowered from 24% to 18%, and whether the revenues would increase or decrease over a one, two, or three-year period.
Aseesimees Arvo Aller
AI Summary
Deputy Chairman Arvo Aller's speech is an appeal to Varro Vooglaid.
Annely Akkermann
Profiling Eesti Reformierakonna fraktsioonAI Summary
I believe that initially, collections will fall, and perhaps later they will recover to the current level. However, retailers' revenues will increase, and the tax reduction won't be reflected in prices as much as we would hope, because the price is an agreement between the buyer and the seller.
Aseesimees Arvo Aller
AI Summary
The speaker calls Rene Kokk to the stage.
Annely Akkermann
Profiling Eesti Reformierakonna fraktsioonAI Summary
Annely Akkermann argues that a reduction in VAT will neither decrease consumer prices nor improve the financial situation of low-income earners, as the money would instead flow into the profits of retailers and producers. She notes that low-wage earners in Estonia already benefit from a tax-free income threshold of 654 euros, and a significant portion of their earnings is spent on necessities and food, which are subject to VAT, but from which they are exempt from paying income tax.
Aseesimees Arvo Aller
AI Summary
Deputy Chairman Arvo Aller requests that Helle-Moonika Helme be called upon to speak.
Helle-Moonika Helme
Profiling Eesti Konservatiivse Rahvaerakonna fraktsioonAI Summary
Helme claims that the VAT increase does not help low-wage earners, and that entrepreneurs are eternal crooks, and furthermore, that a tax cut does not make the country richer or improve people's welfare, finally asking what entrepreneurs and the poor would think about it.
Annely Akkermann
Profiling Eesti Reformierakonna fraktsioonAI Summary
Annely Akkermann claims that a two percent reduction in VAT would likely not be passed on to consumer prices or into the pockets of low-wage earners, but would instead move into company profits. Furthermore, she does not consider making a profit stealing, and the price is determined in a competitive market by a buyer-seller agreement.
Siim Pohlak
Profiling Eesti Konservatiivse Rahvaerakonna fraktsioonAI Summary
Siim Pohlak refutes the claim that tax cuts only flow into corporate profits. He emphasizes that the money is in circulation, and business owners either invest it or pay dividends. He cites examples from neighboring countries and other European states where tax changes have demonstrated a positive impact, and he questions why prices in Estonia are not falling when taxes are reduced.
Aseesimees Arvo Aller
AI Summary
Deputy Chairman Arvo Aller invited Siim Pohlak to speak.
Annely Akkermann
Profiling Eesti Reformierakonna fraktsioonAI Summary
Annely Akkermann claims that even though the bill's stated goal is to use a lower VAT rate to reduce the prices of essential goods for low-wage earners, this isn't actually happening. Moreover, she argues that the bill's purpose is not to channel funds into corporate profits or to boost the money supply in circulation.
Aseesimees Arvo Aller
AI Summary
The address is simply a request directed at Siim Pohlak.
Siim Pohlak
Profiling Eesti Konservatiivse Rahvaerakonna fraktsioonAI Summary
Siim Pohlak notes that improved money circulation is an effect accompanying this bill becoming law, and simultaneously questions why Estonians shop in Latvia if prices there are not cheaper and the VAT reduction has not helped, pointing out that he has Latvian acquaintances who claim that the VAT reduction on their vegetables and domestic fruits is indeed beneficial.
Annely Akkermann
Profiling Eesti Reformierakonna fraktsioonAI Summary
Annely Akkermann argues that the taxes collected by the state do not sit idle; instead, they are put into circulation, which the state uses to pay salaries and benefits—meaning that even 200 million in tax revenue finds its way back into the economy.
Aseesimees Arvo Aller
AI Summary
Vice-Chairman Arvo Aller invited Rain Epler to take the floor.
Rain Epler
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Rain Epler pointed out that if cutting VAT doesn't even lead to a price advantage, he would rather the state receive as much money as possible. He cited the growth in tax revenue—which resulted from the fear of the profit tax and the over-collection of income tax from businesses—and ultimately asked if we shouldn't crank up the pressure so much that tax collection finally starts to suffer.
Aseesimees Arvo Aller
AI Summary
The main message of the speech is that it's your time.
Rain Epler
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Rain Epler asks whether there is a calculation that reviews the entire package, specifically when the state has more money but individuals and businesses do not have more money.
Annely Akkermann
Profiling Eesti Reformierakonna fraktsioonAI Summary
In Estonia, corporate profit is taxed only when it is distributed as dividends. Consequently, companies are well-capitalized and resilient to crises, and withdrawing dividends at a lower tax rate constitutes a sensible component of financial management.
Aseesimees Arvo Aller
AI Summary
The Deputy Speaker concludes the questions, opens negotiations with the factions, and invites Martin Helme to speak on behalf of the EKRE faction.
Martin Helme
Profiling Eesti Konservatiivse Rahvaerakonna fraktsioonAI Summary
Martin Helme claims that previous tax cuts—the reduction in alcohol and diesel excise duties, followed by later adjustments to turnover, social, and VAT taxes—proved that prices would drop, border trade would decrease, consumption would rise, companies would increase wages, and the state would collect more tax revenue than projected.
Aseesimees Arvo Aller
AI Summary
Deputy Chairman Arvo Aller announced that the discussion would be extended by three minutes.
Martin Helme
Profiling Eesti Konservatiivse Rahvaerakonna fraktsioonAI Summary
Martin Helme asserts that the VAT reduction in Latvia eliminated the shadow economy, boosted tax receipts, and increased salaries. Consequently, everyone benefits—except for the bureaucrats—and this demonstrates how tax cuts can genuinely improve the lives of individuals and businesses.
Aseesimees Arvo Aller
AI Summary
Next, Lauri Laats will speak on behalf of the Estonian Centre Party faction.
Lauri Laats
Profiling Eesti Keskerakonna fraktsioonAI Summary
Lauri Laats argues that raising VAT and other taxes makes life harder for people earning lower and middle wages, and that lowering taxes would provide effective relief. He cites the experience of Mustamäe and the cuts implemented in Europe during times of crisis, pointing out that Estonia's consumption tax is relatively high (approximately 42%), which necessitates a complete rethinking of tax policy.
Aseesimees Arvo Aller
AI Summary
Vice-Chairman Arvo Aller asks if the participants want extra time.
Aseesimees Arvo Aller
AI Summary
Deputy Chairman Arvo Aller requested three additional minutes.
Lauri Laats
Profiling Eesti Keskerakonna fraktsioonAI Summary
Lauri Laats accuses the Reform Party of economic mismanagement, claiming that the overall tax burden of 36% neither brings competitiveness to the Estonian economy nor helps ordinary people, and that the population, including young people, is becoming increasingly impoverished. He further argues that lowering the VAT will not solve the issues, even though taxes on foodstuffs are lower across the European Union, while Estonia will implement a 24% VAT starting July 1st.
Aseesimees Arvo Aller
AI Summary
He thanks them and next introduces Annely Akkermann, a member of the Reform Party faction.
Annely Akkermann
Profiling Eesti Reformierakonna fraktsioonAI Summary
Annely Akkermann uses mathematics to explain that a 2% reduction in VAT does not compel people to apply for subsistence benefits, and the example involving Latvian vegetables does not alter the overall trend of wages or tax collection, and she warns that misinterpreting the figures leads nowhere.
Aseesimees Arvo Aller
AI Summary
The Deputy Chairman thanked them and confirmed that Lauri Laats had indeed been mentioned.
Lauri Laats
Profiling Eesti Keskerakonna fraktsioonAI Summary
Lauri Laats said that one must not create a preference for low-wage earners through the income tax-free minimum, as these people are already on the poverty line, and raising taxes increases the number of those who might suffer a psychological breakdown and require assistance from the social services department, which must be avoided in the future.
Aseesimees Arvo Aller
AI Summary
This is Martin Helme's response on behalf of the EKRE faction.
Martin Helme
Profiling Eesti Konservatiivse Rahvaerakonna fraktsioonAI Summary
Martin Helme cites an example from Latvia where a tax cut led to improved tax revenue and a rise in wages in that sector, primarily because it curtailed the shadow economy. Furthermore, his draft bill focuses on the general VAT rate, which impacts nearly all goods and services.
Aseesimees Arvo Aller
AI Summary
Arvo Aller announced that Bill 596 must be rejected during the first reading and that preparations for it should be initiated, requesting the Riigikogu to take a position and proceed to a vote.
Aseesimees Arvo Aller
AI Summary
Thirty-seven members of the Riigikogu voted in favor of the proposal, 10 voted against, and 0 abstained; Bill 596 was rejected and is dropped from the proceedings. The agenda has been completed, and the session is adjourned.