Support for Regions
Session: 15th Riigikogu, 3rd sitting, information briefing
Date: 2024-01-10 14:52
Participating Politicians:
Total Speeches: 11
Membership: 15
Agenda Duration: 14m
AI Summaries: 11/11 Speeches (100.0%)
Analysis: Structured Analysis
Politicians Speaking Time
Politicians
Analysis
Summary
The item on the agenda was an interpellation submitted to Regional Minister Madis Kallas concerning the support of regions and the policy of redistributing the revenue base of local governments (KOV). The questioner, Vadim Belobrovtsev, sharply criticized the government's decision to take a portion of income tax from more successful municipalities, such as Tallinn and its immediate vicinity, and distribute it among other KOVs. Belobrovtsev considered this move unfair and "punitive" towards those local governments that have managed their finances well, citing Tallinn’s potential loss of 20 million euros by 2027 as an example. He questioned the sustainability and fairness of such regional policy. Minister Madis Kallas defended the government's approach, emphasizing that it was not about creating antagonism but about acknowledging the actual situation. He explained that approximately 60 Estonian municipalities have lost their working-age population to the Tallinn and Tartu regions over the last 15–20 years, thereby weakening their budget base. Kallas stressed that the goal is to prevent the emergence of "two Estonias," where only about ten local governments are capable of ensuring an adequate level of services. Furthermore, the minister introduced the idea that the KOV revenue base could partially include corporate income tax, based on the physical location of jobs, rather than solely on the residents' place of residence. This would provide a clear signal and motivation for local governments to develop entrepreneurship within their territory. Anastassia Kovalenko-Kõlvart added further criticism, noting that although the state is redistributing money, simultaneous reforms and tax increases (e.g., the VAT increase, the care reform) immediately take that money back from the municipalities, which essentially amounts to the redistribution of poverty.
Decisions Made 1
No formal decisions were taken, as the matter involved the consideration of an interpellation submitted to the Minister of Regional Affairs during the Riigikogu sitting.
Most Active Speaker
The most active participant was Vadim Belobrovtsev, who posed both the initial question and a clarifying follow-up. Belobrovtsev represented a critical (opposition) stance regarding the government’s regional policy, which involves redistributing income tax collected from more successful local municipalities. He stressed that this kind of policy unfairly penalizes local governments for their success and is unjust.
Esimees Lauri Hussar
AI Summary
The fourth question concerns support for regions, and it will be presented by Vadim Belobrovtsev to the Minister of Regional Affairs, Madis Kallas.
Vadim Belobrovtsev
Profiling Eesti Keskerakonna fraktsioonAI Summary
Vadim Belobrovtsev is criticizing the draft legislation that takes money from successful local governments and redistributes it to the less successful ones, citing the example of Tallinn’s significant losses and questioning whether such a regional policy is sustainable, correct, and fair.
Esimees Lauri Hussar
AI Summary
He turns to the minister with a request.
Regionaalminister Madis Kallas
AI Summary
Regional Minister Madis Kallas stressed that we must not pit local governments against each other, and the allocation of income tax must be based on the actual situation—where rural areas have more pensioners and cities have more working-age people—to ensure balanced investments and services across all of Estonia.
Esimees Lauri Hussar
AI Summary
Chairman Lauri Hussar thanked [the speaker] and called upon Vadim Belobrovtsev for a clarifying question.
Vadim Belobrovtsev
Profiling Eesti Keskerakonna fraktsioonAI Summary
He/She points out that we all want a unified Estonia, but the leaders of local governments do not support the proposed solution, and he/she asks for clarification on how taxation based on the workplace could function and what its mechanism would be.
Regionaalminister Madis Kallas
AI Summary
Regional Minister Madis Kallas said that, given the current state budget situation, it is not possible to immediately provide local municipalities with additional resources. However, a new mechanism will be established under which approximately 700 million euros annually from the income tax of legal entities will be distributed at a rate of 5% among all local governments based on the number of jobs they contain. This distribution primarily benefits large municipalities and county centers. He also stressed that every job is valuable to the local government, and the accuracy of the employee register will be an important topic for discussion in the future.
Esimees Lauri Hussar
AI Summary
Chairman Lauri Hussar thanks [the previous speaker] and invites Anastassia Kovalenko-Kõlvart to ask a supplementary question.
Anastassia Kovalenko-Kõlvart
Profiling Eesti Keskerakonna fraktsioonAI Summary
Anastassia Kovalenko-Kõlvart stated in the Riigikogu that local government budgets are struggling due to rising prices, increasing loan interest rates, and wage hikes, and that approximately 150 million euros have disappeared from these budgets through redistribution. Although money is allocated to one local authority, it is later clawed back through reforms and tax increases, and this system does not make local governments wealthier. Therefore, she is requesting specific examples of additional investments or European funding, along with an analysis and forecast detailing how much money will be taken out of local governments this year through tax increases and reforms.
Regionaalminister Madis Kallas
AI Summary
Regional Minister Madis Kallas acknowledged that specific figures regarding the impact of tax changes on local municipalities are not yet known, and the funds have not been received. However, growth in the revenue base and the stabilization of energy prices are visible, but larger resources would be needed to cover additional costs due to Euribor, as approximately 60 local governments are currently facing an extremely difficult situation.
Esimees Lauri Hussar
AI Summary
Chairman Hussar gives thanks and announces that today’s fourth question has concluded.