First Reading of the Draft Act on Amendments to the Value Added Tax Act (286 SE)
Session: 15th Riigikogu, 3rd session, plenary session
Date: 2024-02-21 18:27
Participating Politicians:
Total Speeches: 71
Membership: 15
Agenda Duration: 58m
AI Summaries: 71/71 Speeches (100.0%)
Analysis: Structured Analysis
Politicians Speaking Time
Politicians
Analysis
Summary
The Riigikogu debated the first reading of Bill 286, a draft act amending the Value Added Tax Act, which was initiated by the parliamentary group of the Conservative People's Party of Estonia. The aim of the bill was to lower the VAT rate on foodstuffs to 5% in order to improve food accessibility for low-income families and support domestic fruit and vegetable growers, especially considering the increase in the VAT rate to 22% that took effect at the beginning of 2024. Rapporteur Arvo Aller (EKRE) emphasized that lowering the tax would stimulate consumption, provide certainty for small businesses, and help ensure Estonia's food security, citing examples of the difficult situation and losses faced by the agricultural sector. He countered the common opinion that the tax cut would not reach the consumer, referring to previous experiences with excise duty reductions in Latvia and Estonia, where revenues to the state budget actually increased.
Annely Akkermann, Chairman of the lead committee (the Finance Committee), presented the position of the government and the committee, which was negative regarding the bill. The main objections were related to the balance of the state budget, as the budget would lose over 400 million euros in revenue if the bill were to become law. It was also argued that lowering the VAT is a regressive measure that would bring greater benefit to wealthier consumers who spend nominally more on food, and that those in need should instead be supported through direct subsidies. The committee proposed rejecting the bill during the first reading, a proposal which was subsequently confirmed by vote.
Decisions Made 1
Draft Bill 286 (the Draft Act amending the Value-Added Tax Act) was rejected during its first reading. In the vote, 42 members of the Riigikogu supported the rejection, while 15 members voted against it.
Most Active Speaker
The most active speaker was the bill’s rapporteur, Arvo Aller (p1ZGuKzKh_0), representing the Conservative People’s Party of Estonia faction (opposition). Aller delivered the opening address and subsequently answered numerous questions, thoroughly explaining the bill’s positive impact on low-income consumers, domestic food production, and more broadly, the state’s economy and food security. He stressed the necessity of supporting the agricultural sector, which is currently facing severe economic hardship.
Aseesimees Toomas Kivimägi
AI Summary
Deputy Speaker Toomas Kivimägi announced that the sixth item on the agenda had been withdrawn, and the seventh item on the agenda was the first reading of Draft Act 286, initiated by the EKRE faction, concerning amendments to the Value-Added Tax Act, and he invited his good colleague Arvo Aller to the Riigikogu podium to deliver the report.
Arvo Aller
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
The Estonian Conservative People's Party submitted a draft amendment to the Value Added Tax Act on September 21, 2023, the aim of which is to reduce the VAT on foodstuffs to 5% in order to improve food accessibility for low-income families and to stimulate consumption and the economic activity of micro and small enterprises.
Aseesimees Toomas Kivimägi
AI Summary
Deputy Chairman Toomas Kivimägi thanked and congratulated the birthday celebrant, and Evelin Poolamets asked a question.
Evelin Poolamets
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Evelin Poolamets stresses that reducing the VAT on food items is highly welcome, and asks how this would impact the Estonian economy and inflation.
Arvo Aller
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Lowering the VAT would certainly have a positive impact on the economy, stimulating food producers and making fresh fruit and vegetables accessible and affordable for more people—which is crucial for public health—though the effect on inflation would not be significant.
Aseesimees Toomas Kivimägi
AI Summary
Deputy Speaker Toomas Kivimägi invites Helle-Moonika Helme to take the floor.
Helle-Moonika Helme
Profiling Eesti Konservatiivse Rahvaerakonna fraktsioonAI Summary
In her report, Helle-Moonika Helme notes that two main news items have circulated in the media: the bankruptcy of small Estonian food producers and the subsequent cost-cutting on their products. Citing the examples of Pajumäe farm and Nopri farm, she argues that this shattered dream demonstrates that the survival of small producers is not just a matter of tax policy, but fundamentally a question of food security.
Arvo Aller
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Lowering the VAT on food products to 5% would ensure consumers can access food at reasonable prices, help small producers enter the market, and is crucial for the sake of national security and food security.
Aseesimees Toomas Kivimägi
AI Summary
Toomas Kivimägi asks Rene Kokk to come here.
AI Summary
Rene Kokk emphasized that the bill is reasonable and necessary because, against the backdrop of inflation and rising prices, domestic Estonian products are decreasing in stores and people are preferring foreign goods. Furthermore, the bill would help domestic producers enter the market and give people the opportunity to buy quality food.
Arvo Aller
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Arvo Aller stated that the aim is to give domestic food producers the opportunity to sell high-quality Estonian food to consumers at an acceptable price and to strengthen food security. This is because currently all goods are subject to a 22% VAT, causing people to favor cheaper imported products, and this change would bring prices down.
Aseesimees Toomas Kivimägi
AI Summary
This is a brief invitation for Martin Helme to speak.
Martin Helme
Profiling Eesti Konservatiivse Rahvaerakonna fraktsioonAI Summary
Martin Helme notes that the two main arguments against this are that the price reduction might not necessarily cut into the merchant's profits and that budget revenues would fall, but the experiences of Latvia and Estonia show that these cuts can actually increase tax revenue and VAT collection through higher wages.
Arvo Aller
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Arvo Aller claims that lowering excise duties brought more money into the budget, and raising taxes may not necessarily improve revenue collection. He emphasizes that reducing the value-added tax (VAT) would provide the economy with additional funds, enable wage increases and investments, and help Estonian food producers survive.
Aseesimees Toomas Kivimägi
AI Summary
Helle-Moonika Helme is invited to speak.
Helle-Moonika Helme
Profiling Eesti Konservatiivse Rahvaerakonna fraktsioonAI Summary
Helme stresses that, against the backdrop of European farmers' protests and the influence of the green transition and tax policy, the actual situation in Estonia is not as sound as claimed, and the statement made by large producers fails to reflect the true state of affairs.
Arvo Aller
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Arvo Aller notes that although the media claims problems are absent, the agricultural sector faces serious concerns—including last year's total deficit of approximately -70 million euros, 60–70 million in unpaid bills, the bankruptcy of Pajumäe farm, the shrinking number of producers, and the repossession of machinery. He calls for clear support and open discussion, arguing that without these measures, farmers will not fully grasp the severity of the situation, and they are prepared to demonstrate how things truly ought to be.
Aseesimees Toomas Kivimägi
AI Summary
Deputy Speaker Toomas Kivimägi invited Martin Helme to speak.
Martin Helme
Profiling Eesti Konservatiivse Rahvaerakonna fraktsioonAI Summary
Martin Helme recalls that farmers were better supported by subsidies in earlier times, and he emphasizes that the common market and the Common Agricultural Policy must not restrict the granting of tax incentives to Estonian producers. He calls for finding a legal solution to this problem.
Arvo Aller
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
A 5% value-added tax (VAT) on food, including fruits and vegetables, would help promote Estonian food producers, enhance their competitiveness and food security. Furthermore, this measure would not be controversial within the EU context, provided that imported foodstuffs are also subject to the same 5% rate.
Aseesimees Toomas Kivimägi
AI Summary
Vice-Chairman Toomas Kivimägi addresses Mart Helme and asks him for something.
Mart Helme
Profiling Eesti Konservatiivse Rahvaerakonna fraktsioonAI Summary
Mart Helme criticizes the government and claims that the current policy will drive the economy into ruin. He highlights two conceptual approaches to increasing the VAT on agricultural products: either a large immediate revenue intake, or a smaller but long-term revenue stream, arguing that rising prices reduce consumption, making the tax revenues for the state treasury unstable.
Aseesimees Toomas Kivimägi
AI Summary
Deputy Chairman Toomas Kivimägi simply said in his speech: "Thank you!"
Mart Helme
Profiling Eesti Konservatiivse Rahvaerakonna fraktsioonAI Summary
He discusses how tax revenues might increase or decrease.
Arvo Aller
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Arvo Aller stated that adhering to two philosophies guarantees a long-term and secure income for the state budget, as well as the sustainable development of food producers. This is because, while a 22% VAT might yield quick revenue collection, it leads to reduced consumption and the replacement of domestic goods with foreign products. Conversely, keeping the VAT at 5% ensures a long-term, stable revenue stream for both producers and the state, a principle demonstrated by previous excise duty reductions.
Aseesimees Toomas Kivimägi
AI Summary
Deputy Speaker Toomas Kivimägi invites Rene Kokk to take the floor.
AI Summary
Rene Kokk argues that agriculture is currently in deep trouble. Even though the government claims to have banned the bank tax, this relief has still not reached the farmers. He stresses that at least the draft bill should be passed to aid the sector, because promises regarding improved capital availability have not been fulfilled and MES is reacting slowly.
Arvo Aller
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Arvo Aller stated that agriculture is complex and last year's loss was colossal, and although EKRE allocated 200 million to MES, decisions must be expedited through the Rural Development Foundation so that farmers can quickly access capital.
Aseesimees Toomas Kivimägi
AI Summary
Please welcome to the stage, Evelin Poolamets.
Evelin Poolamets
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Evelin Poolamets states that the draft bill to increase school lunch support is necessary because, due to inflation and rising prices, municipalities are unable to provide students with a healthy lunch, and she asks how the draft bill would improve their situation.
Arvo Aller
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Arvo Aller said that adding VAT to school meals would make school food cheaper and accessible daily, because local governments cannot reclaim the VAT. He added that lowering the daily price or providing greater support would be beneficial to children, food producers, farmers, and local municipalities alike.
Aseesimees Toomas Kivimägi
AI Summary
Siim Pohlak is invited onto the stage at the beginning of the speech.
Siim Pohlak
Profiling Eesti Konservatiivse Rahvaerakonna fraktsioonAI Summary
Siim Pohlak emphasizes that Estonia's VAT on foodstuffs is the second highest in the EU, arguing that this is unfair given people's purchasing power. He recommends approaching the solution more broadly, starting with the taxation of agricultural products and considering further steps.
Arvo Aller
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Arvo Aller stated that the taxation on foodstuffs should be gradually reduced to 5%, a move which could significantly lower prices. However, reducing it to zero might still gain approval, and any subsequent steps should rely on the stability and regularity of the 5% tax revenue flowing into the state budget.
Aseesimees Toomas Kivimägi
AI Summary
The Deputy Speaker calls upon Rain Epler to speak.
Rain Epler
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Rain Epler emphasized that tax cuts, such as reductions in VAT and fuel excise duty, can increase company profits. This, in turn, boosts investment capacity and sustainability. He is trying to reassure those politicians who view profit negatively, stating that profit is good and necessary in business, and he is asking his colleagues for assistance in explaining this.
Arvo Aller
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Arvo Aller noted that profit is nothing bad, and it allows for investment, improving product quality, and expanding the company. However, last year the agricultural sector was 70 million in the red, and in his and our faction's opinion, the first step toward improving the situation would be lowering the VAT on foodstuffs.
Aseesimees Toomas Kivimägi
AI Summary
Vice-Chairman Toomas Kivimägi invites Mart Helme to speak.
Mart Helme
Profiling Eesti Konservatiivse Rahvaerakonna fraktsioonAI Summary
Mart Helme expresses concern that unusually high food prices could lead to a shrinking product range, as producers focus on budget-friendly options, thereby limiting our food choices, dietary diversity, and overall food security.
Arvo Aller
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Arvo Aller states that high prices lead to limited choices for consumers, often resulting in a decline in quality and nutritional value. He argues that lowering the value-added tax (VAT) would be the best way to ensure people are provisioned with food, given that consumers primarily shop based on price, and affordable products drive sales.
Aseesimees Toomas Kivimägi
AI Summary
Deputy Speaker Toomas Kivimägi invites Jaak Valge to speak.
Jaak Valge
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Jaak Valge highlighted that the VAT rate applied to Estonian agricultural products is among the highest in Europe, and the level of European Union direct payments for the Baltic states is significantly lower—around 75% of the EU average. This places Estonian farmers in the worst competitive position within the European Union, and he questions how they have managed to cope up until now.
Arvo Aller
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Arvo Aller confirms that Estonian farmers are persistent and dedicated workers, and although the proportion of area-based subsidies is among the lowest in the EU, and the total support, including investment and market development subsidies, reaches about 50–60%, high-quality food is produced despite the climate, and the output of Estonian dairy cows is among the best in Europe. Furthermore, by lowering VAT, it would be possible to make food prices more affordable for consumers, which ensures food security and national defense.
Aseesimees Toomas Kivimägi
AI Summary
Deputy Speaker Toomas Kivimägi asked Henn Põlluaas to take the floor.
Henn Põlluaas
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Henn Põlluaas emphasizes that direct payments to Estonian farmers are extremely small at the EU level and must be equalized. He adds that lowering the VAT is, in his opinion, a justified step, but he questions whether the progressive government has harmonized these direct payments in recent years to reduce inequality.
Aseesimees Toomas Kivimägi
AI Summary
The speech was merely an expression of thanks.
Arvo Aller
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Arvo Aller confirmed that there will be no equalization of direct payments, and Estonia must appeal to the European Commission to alleviate the restrictions (the reduction of fertilizers and plant protection products, and the requirements not to plough up permanent grassland) and to use permanent grassland for food production, thereby increasing the amount of land used for food and speeding up the payments.
Aseesimees Toomas Kivimägi
AI Summary
The presenter was thanked, and it was announced that we would now hear the views of the leading committee, requesting the opinion of Annely Akkermann, Chair of the Finance Committee.
Annely Akkermann
Profiling Eesti Reformierakonna fraktsioonAI Summary
Annely Akkermann described the Finance Committee's discussion regarding Draft Law 286, which aimed to lower the VAT on food to 5%. She acknowledged its regressive nature and questions surrounding its utility, and stated that the committee decided to reject the bill and place it on the plenary session agenda for December 5th.
Aseesimees Toomas Kivimägi
AI Summary
Deputy Chairman Toomas Kivimägi thanked [the previous speaker/group] and asked Henn Põlluaas to pose at least one question.
Henn Põlluaas
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Henn Põlluaas accuses the government and the coalition of causing rising prices and a drop in the standard of living, and asks why they are not helping people and farmers improve food availability.
Annely Akkermann
Profiling Eesti Reformierakonna fraktsioonAI Summary
Annely Akkermann argues that the concept of "our farmers" is debatable, given that a general reduction in VAT on foodstuffs affects not only Estonian farmers but also those in Finland, Sweden, Germany, Latvia, and Lithuania. Furthermore, she rejects the assertion that the coalition has considered vulnerable groups, noting that although benefits and pensions have increased, retail store revenues also grew significantly during the period of inflation. She worries that this tax cut will not reach those who genuinely need assistance but will instead be absorbed into the profits of large corporations.
Aseesimees Toomas Kivimägi
AI Summary
The speaker asks his colleagues not to interrupt and turns to Arvo Aller.
Arvo Aller
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
The core of Arvo Aller's speech is the concern that the reduction in VAT might primarily benefit producers. He points out that cumulative inflation stands at around 40%, and he asks how much subsidies would need to increase so that food and school meals remain accessible to people despite the 10% VAT hike.
Annely Akkermann
Profiling Eesti Reformierakonna fraktsioonAI Summary
Annely Akkermann emphasizes that the effective VAT increase since the beginning of the year is 1.67%, but prices have risen even further, and therefore, the preceding measures have increased the cash flow by more than the 1.67% VAT increase.
Aseesimees Toomas Kivimägi
AI Summary
Colleague Jaak Valge is asked to put a question to the presiding officer of the session, and he is handed the microphone.
Jaak Valge
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Jaak Valge asks why interjections are not permitted during Riigikogu sessions, and argues that heckling could liven up the debate, noting that such interjections have historically been transcribed in the parliaments of both Estonia and England.
Aseesimees Toomas Kivimägi
AI Summary
He emphasized that interruptions are a procedural matter, the acceptance of which depends on culture and history. Our Nordic setting generates fewer of these than the UK Parliament. He then stated that he would provide just one more procedural example and no more.
Helle-Moonika Helme
Profiling Eesti Konservatiivse Rahvaerakonna fraktsioonAI Summary
Helle-Moonika Helme asserts that there is nothing unique about the Nordic debate and that the effect of a low VAT rate on food reaches the consumer, citing the examples of Italy and the 0% tax, and recalling the impact of the Reform Party's promise on the state budget.
Aseesimees Toomas Kivimägi
AI Summary
Toomas Kivimägi emphasized that order must be maintained in the Riigikogu. He stated that he would intervene if interruptions disturbed the speaker, but otherwise, he would only permit polite and restrained remarks. Furthermore, if necessary, the opening of Pandora's box would be discussed in the Council of Elders.
Kalle Grünthal
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Grünthal claims, according to sources within the coalition's inner circle, that Kaja Kallas has issued an order not to allow bills submitted by opposition parties to pass, and he challenges counterarguments by asking them to name at least one such bill that has successfully passed in the chamber.
Annely Akkermann
Profiling Eesti Reformierakonna fraktsioonAI Summary
I haven't received that kind of instruction, but yesterday the application to bring Ukrainian children home passed with quite a large consensus. There have also been examples of this in previous years; ten years ago, there were many more of them.
Aseesimees Toomas Kivimägi
AI Summary
In the address, Kalle Grünthal was asked to present his second question.
Kalle Grünthal
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
He notes that what happened yesterday truly passed unanimously, but many coalition members were also involved in submitting the bill, and asks (the person) to name at least one bill that was submitted by opposition members and approved right here in this chamber.
Annely Akkermann
Profiling Eesti Reformierakonna fraktsioonAI Summary
Annely Akkermann said that it had not been discussed in the commission, and she was not ready to answer that question.
Aseesimees Toomas Kivimägi
AI Summary
Toomas Kivimägi thanked the presenter, noted that there were no questions, and added a bit of humor. He recalled the opposition's draft bill, which had accidentally passed, touched upon improving the political situation, and found support, and then announced the end of the negotiations and their reopening.
Mart Helme
Profiling Eesti Konservatiivse Rahvaerakonna fraktsioonAI Summary
Mart Helme accuses the opposition and the government of obstruction, complains about the lack of substantive debate on the topics of food prices, quality, and availability, calls upon experts, and emphasizes the need to consider long-term tax revenue and budget balance.
Aseesimees Toomas Kivimägi
AI Summary
The talk focuses on the proposal to grant an additional three minutes.
Mart Helme
Profiling Eesti Konservatiivse Rahvaerakonna fraktsioonAI Summary
Mart Helme said that it is necessary to ensure the functioning of an undamaged market and the sale of production. He emphasized real-life business and his personal contribution to planting forests and producing CO2, and accused the parliament of failing to seek solutions, calling it the chamber of denunciation.
Aseesimees Toomas Kivimägi
AI Summary
Toomas Kivimägi stated that the accusations made against colleagues—that they do not want to work—are inappropriate. He emphasized the differing opinions and informed the body that the lead committee intends to reject Bill 286 during the first reading and proceed to a vote.
Aseesimees Toomas Kivimägi
AI Summary
The Riigikogu supported the proposal with 42 votes in favor, 15 against, and 0 abstentions; draft bill 286 was rejected in the first reading and is dropped from the proceedings, and the former Foreign Minister of Iceland, Jón Baldvin Hannibalsson, who is present on our balcony, was honored with a round of applause on the occasion of his birthday.