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Parliamentary committees reach consensus on changes to car tax legislation

The Riigikogu, Estonia’s parliament, has been faced with a challenge regarding the adoption of a car tax bill that was rejected by President Alar Karis last month. The constitutional and finance committees of the Riigikogu have come to an agreement that the bill cannot be re-adopted without making significant amendments. This decision comes after the president raised concerns that the provisions of the law did not align with the principle of equal treatment.

Hendrik Johannes Terras, the Chairman of the Constitutional Committee, emphasized that the group supports the president’s stance and believes that the law must be revised before it can be reconsidered for adoption. He stated, „The president took the view that the provisions of the act did not comply with the principle of equal treatment. We consider his position to be well-founded and that the law should be amended.“

Annely Akkermann, the Chairman of the Finance Committee, echoed Terras‘ sentiments and highlighted that MPs have decided not to support the adoption of the law in its current form. She mentioned that discussions with the president’s office, the Ministry of Social Affairs, and the Ministry of Finance have taken place to find a solution that upholds the principle of equal treatment. Akkermann stated, „The decision was taken after discussions with the president’s office, the Ministry of Social Affairs and the Ministry of Finance to find a solution to ensure the principle of equal treatment.“

The car tax bill was initially adopted by the Riigikogu on June 12, but President Alar Karis refused to promulgate the law on June 25, citing concerns about its compliance with the principle of equal treatment. As a result, the bill will be revisited in the upcoming week to address the issues raised by the president.

The proposed law introduces two new taxes for vehicle owners. The first tax will be an annual payment required for vehicles registered in the motor register. This tax will be calculated based on a combination of factors, including the vehicle’s CO2 emissions and gross weight. Additionally, a motor vehicle registration fee will be implemented for passenger cars and vans upon registration in the motor register.

If the bill is eventually passed with the necessary amendments, buying and owning a car in Estonia will become more expensive, with costs expected to increase by 5 to 15 percent. This change aims to generate revenue for the government and potentially incentivize the use of more environmentally friendly vehicles.

In conclusion, the Riigikogu’s decision to not re-adopt the car tax bill without amendments demonstrates a commitment to upholding the principle of equal treatment and addressing the concerns raised by the president. The discussions and revisions surrounding this legislation highlight the importance of ensuring fairness and transparency in tax laws. As the bill is reconsidered in the coming weeks, it will be interesting to see how the proposed changes will impact vehicle owners in Estonia.

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