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Riigikogu

At Wednesday's sitting, the Riigikogu passed 21 Acts, including the Public Procurement Act, the Act on platform-based taxi service, the Act tightening the punishment for intoxicated drivers, the Act to eliminate the deficiencies of the work ability reform, and two Acts concerning the termination of the activities of county governments and local government organisation.

The Riigikogu also approved the Resolution concerning the use of the Defence Forces in the NATO-led Defence Capacity Building Programme for Iraq.

Bills relating to tax changes also passed the second reading in the Riigikogu.

At the beginning of the sitting, a moment of silence was held in remembrance of the victims of the June deportation of 1941 and their close ones.

The sitting ended at 00.44 a.m.

The Riigikogu passed 21 Acts:

The Riigikogu approved with 66 votes in favour (24 against, one abstention) the Public Procurement Act (450 SE), initiated by the Economic Affairs Committee. The Act will increase the flexibility of the conduct of public procurements and reduce the costs of procurement procedure, and transposes three European Union directives.

The Act provides for raising the thresholds for public procurements which allows for simplified procurement procedures to be used more extensively. The Act also creates preconditions for small and medium-sized enterprises to have better access to procurements, because it restricts the right of the contracting authority or entity to require a large economic turnover for participation in a competition, and obligates the contracting authority or entity to give additional reasons as to why they do not wish to divide up a large procurement.

The Act provides for a new type of procurement procedure – innovation partnership, which can be used for the development and subsequent purchase of an innovative product, service or works not yet on the market. The amendments also provide that, in the future, small-scale changes to a public contract will be allowed without the additional obligation to give reasons. 10 per cent of the initial value of the supply and service contract or 15 per cent of the initial value of the works contract are considered to be small-scale changes.

The Act creates the bases for transition to paper-free organisation of e-public procurements. The obligation of full transition to e-public procurements enters into force on 18 October 2018. During the transitional period, contracting bodies can adapt themselves to the new provisions and make the information technology developments necessary for a smooth transition.

An amendment concerning the regulation of checking tenders with an unjustifiably low price was incorporated into the Act. Implementation of the “deviation percentage” method in the public procurement of construction works means that the contracting body has the right to ask the tenderer for an explanation concerning the seriousness of its tender.

The regulation concerning the protection of subcontractors was established in the Act. As of 1 January 2019, additional provisions concerning the inspection of subcontractors and the additional securities for payment of remuneration to them in public works contracts will enter into force.

In the review procedure, the Review Committee can order payment of the costs on contractual representatives incurred in the review procedure as of 1 January 2019.

The general deadline for entry into force of the Act is 1 September this year.

The Public Procurement Bill (204 SE), initiated by the Government, had been dropped from the proceedings at the final vote on 3 May because it had not gained the required 51 votes in favour. Therefore the Economic Affairs Committee had initiated the Public Procurement Bill again.

Deniss Boroditš, who took the floor on behalf of the Reform Party Faction during the debate, said that the Reform Party Faction did not support the Act in such form. He criticised that bureaucracy would increase with the inspection of subcontractors and that the contracting body would be given the role of a judge.

Krista Aru, who took the floor on behalf of the Free Party Faction, pointed out the increase of bureaucracy as a negative aspect of the Act and the protection of small undertakings as a positive aspect. She said that the Free Party Faction supported the passage of the Act.

The Riigikogu approved with 91 votes in favour the Act on Amendments to the Value-Added Tax Act and the National Defence Act (Implementation of the Agreement on Defense Cooperation between the Government of the United States of America and the Government of the Republic of Estonia) (431 SE), initiated by the Government.

The amendment amends the list of persons to whom tax exemption upon importing of goods for personal purposes, and reimbursement of VAT upon receiving goods or services in Estonia is applied. The list is amended by including employees of contractors of the armed forces of foreign states who, under the agreement on defence cooperation between the Republic of Estonia and the United States of America, are exempt from tax upon the importing of items needed for personal purposes.

Hannes Hanso, who took the floor on behalf of the Social Democratic Party Faction in the debate, expressed a hope that the Riigikogu would support the passage of the Act.

Ants Laaneots, who took the floor on behalf of the Reform Party Faction, supported the Bill.

Oudekki Loone, who took the floor on behalf of the Centre Party Faction, stressed that the Bill concerned amendment of the Value-Added Tax Act.

The Riigikogu passed with 90 votes in favour the Act on Amendments to the President of the Republic Official Perquisites Act and the President of the Republic Work Procedure Act (436 SE), initiated by the Constitutional Committee, which provides for abandonment of the regulation concerning the vacation of the President of the Republic which is not necessary in actual life and which is incompatible with the status of the head of state. The regulation has been in force for more than 20 years, but not one head of state has taken a vacation during that time. This indicates that the provisions concerning the vacation of the President of the Republic are unnecessary.

The Act brings the legal acts regulating the activities of the head of state into conformity both with the actual situation and the opportunities of today’s digital world in which the President of the Republic can perform his or her functions at every time and everywhere. Based on the right to self-organisation, it is possible for the President of the Republic to take periods of rest within the limits of the obligations arising from the professional activity of the President of the Republic and the possibilities arising therefrom.

The Riigikogu approved with 86 votes in favour (one abstention) the Act on Amendments to the Implementation of Convention on Grant of European Patents Act and Other Acts (440 SE), initiated by the Government, which makes necessary amendments to implement the European unitary patent protection. The unitary patent protection system gives an additional possibility for an applicant to protect his or her invention, besides classical European patent. Such a system is cheaper, as at present an applicant must pay amounts in every country in which he or she applies for protection for his or her invention. The system to be created will allow to obtain patent protection for an invention so that it has unitary protection and effect in all member states participating in the system. As at present, all EU Member States with the exception of Spain and Croatia are connected with the scheme for the creation of a European patent with unitary effect. In order to ensure smooth functioning of the new patent regulation, a Unified Patent Court is also being established.

An amendment was incorporated into the Act according to which it enters into force at the same time with the entry into force of the Agreement on a Unified Patent Court and the Agreement on the Establishment of a Nordic-Baltic Regional Division of the Unified Patent Court in respect of Estonia.

The Riigikogu approved with 58 votes in favour (24 against) the Act on Amendments to the Penal Code and Amendments to Other Associated Acts (adopting a stricter attitude towards driving a vehicle while intoxicated) (328 SE), initiated by the Government, which aims to bring the gravity of the offence into better conformity with the punishment.

The Act provides for a stricter punishment for causing a traffic accident with serious consequences in a state of intoxication. Mandatory shock imprisonment is prescribed for repeatedly driving a vehicle in a state of intoxication. In the case of a criminal offence, total suspension of punishment on parole is precluded. An obligation to impose deprivation of the right to drive as a supplementary punishment is provided for.

The Act stimulates first offenders to refrain from new offences, and creates the possibility to be released on parole from a punishment for a misdemeanour and, under certain conditions, to keep the right to drive. In the event of exceeding the permitted alcohol level, it is possible to order the offender to treatment, training or a social programme for the period of probation.

The Act provides for additional regulation in regards to traffic education and the attitude of passengers, and provides for additional necessary elements of a criminal offence for the case where the driver who has caused a serious traffic accident leaves the scene.

The Act enters into force on 1 November this year.

Külliki Kübarsepp, who took the floor on behalf of the Free Party Faction, and Hanno Pevkur, who took the floor on behalf of the Reform Party Faction in the debate, did not support the Bill.

Raivo Aeg, who took the floor on behalf of the Pro Patria and Res Publica Union Faction, supported the Bill.

The Riigikogu approved with 80 votes in favour the Act on Amendments to the Penal Code and Amendments to Other Associated Acts (385 SE), initiated by the Government, which is connected with preparation of the ratification of the Convention on preventing and combating violence against women and domestic violence or the Istanbul Convention. The main amendments criminalise harassment involving stalking, marriage against will, crippling female genital mutilation, and purchase of sex from a victim of trafficking in human beings. At the same time, the Act extends the range of criminal offences committed against minors in the case of which the limitation period is suspended until the victim attains the age of majority.

The Riigikogu approved with 78 votes in favour (7 against) the Act on Amendments to the Code of Criminal Procedure and the Code of Criminal Procedure Implementation Act (transposition of the European Investigation Order directive) (442 SE), initiated by the Government, which transposes into Estonian law the European Investigation Order directive. According to the proposed amendments, in the future, the same requirements for the transmission, recognition and execution of legal assistance requests will apply in all European Union Member States. The submission of legal assistance requests with the help of European Investigation Order and obtaining replies to them will become faster because all European Union Member States will observe uniform deadlines.

The Riigikogu approved with 84 votes in favour the Labour Dispute Resolution Act (407 SE), initiated by the Government, which regulates the establishment and the rules of procedure of labour dispute committees, and the procedure for the resolution of a labour dispute. The Act ensures simple, speedy, cheap and efficient out-of-court resolution of labour disputes. Up to now, out-of-court labour disputes have been resolved pursuant to the Individual Labour Dispute Resolution Act which has been in force since September 1996, and several deficiencies have become apparent in practice in the implementation thereof.

The Act provides for alternative possibilities to resolve labour disputes in the form of written proceedings, conciliation procedure and compromise. The current procedure allows for hearing an application at a meeting of a labour dispute committee. By way of an exception, an application can be resolved in the absence of the parties only in the case when the parties admit each other’s claims to the full extent. There are no possibilities for conciliation procedure or compromise upon the resolution of a labour dispute. In practice, compromises are entered into, but this happens outside labour disputes, as a result of which the existence of an enforcement instrument is not ensured.

According to the Act, in the future, the chairman of a labour dispute committee can resolve alone financial claims amounting up to 6400 euro. In other cases and at the request of the parties, the matter is resolved at a meeting by a three-member committee. The current upper limit of 10,000 euro for financial claims solved by labour dispute committees is eliminated in the Act. At present, it is possible to have recourse only to a court if a claim exceeds 10 000 euro.

The term for the hearing of a matter of labour dispute is extended from the current 30 calendar days to 45 calendar days. The amendment arises from practice as in the last two years the average duration of reviewing labour disputes has been 36 days.

The motions to amend submitted during the second reading concern the right of workers posted to Estonia to have recourse to a labour dispute committee, introducing the concept of “matter of labour dispute”, greater variation in the salaries of the chairmen of labour dispute committees, and the entry into force of the Act. The Act enters into force on 1 January 2018 in general, but sections 67 and 68 enter into force pursuant to general procedure.

The Riigikogu approved with 89 votes in favour the Act on Amendments to the Government of the Republic Act and Other Acts, arising from the termination of the activities of county governments (432 SE), initiated by the Government.

The Government has decided to terminate the activities of county governments as of 1 January 2018. The Act gives the functions of county governments to ministries or the authorities within their area of government, local authorities and local governments to be performed jointly. The transfer of the functions of the development of public transport and county development activities from county governments has been discussed in the Act on Amendments to the Local Government Organisation Act and Other Acts relating to the Implementation of Administrative Reform. The functions of the county government and the county governor in the Social Welfare Act and other Acts of the relevant sphere are amended with a separate Act submitted by the Ministry of Social Affairs. The reorganisation of county governments does not eliminate counties as administrative units. The general time entry into force of the Act is 1 January 2018.

The amendments made during the second reading concern the reorganisation of the State Shared Service Centre into a governmental authority, specification of the competence of vital statistics officials of county centres, and the organisation of changing the name of a person.

Arto Aas, who took the floor on behalf of the Reform Party Faction during the debate, supported the completion of the county governments reform.

In the opinion of Külliki Kübarsepp, who took the floor on behalf of the Free Party Faction, the time of county governments was over, but the reform had been too hasty.

In the opinion of Ivari Padar, who took the floor on behalf of the Social Democratic Party Faction, the Bill was of significant importance in the modernisation of public authority.

Helmut Hallemaa, who took the floor on behalf of the Centre Party Faction, supported both the Bill on the termination of the activities of county government and the Bill on local government organisation.

The Riigikogu approved with 77 votes in favour the Act on Amendments to the Local Government Organisation Act and Other Acts relating to the Implementation of Administrative Reform (433 SE), initiated by the Government, which makes amendments to the functions and the organisation of cooperation of local authorities. The Act provides for the bases for the cooperation of local authorities in order to enable joint authorities to be formed. Local authorities of several counties also have the right to form regional unions instead of county unions.

According to the Act, the function of local authorities is to jointly plan the development of counties. The Act transfers the current functions of county governments in the organisation of public transport to the Road Administration with the possibility to give the regional organisation of public transport to the regional public transport centres formed by local authorities and the state. The Act does not discuss the changes to the system for funding local authorities or the transfer of additional functions, or the activities related to the elimination of county governments on a wider scale.

To enhance the cooperation of local governments, the Act provides that, for the performance of their functions, rural municipalities and cities can form joint agencies (joint administrative agency) and joint authorities (jointly administered authority). It is possible to establish for example a procedural service (law enforcement unit) as a joint agency, and an art school (hobby school) as a joint authority.

According to the Act, as of 1 January 2018, it is the function of the local authorities to jointly plan the development of counties. The county development strategy that so far has been in the area of responsibility of the county governor is the basis for jointly directing the development, for example, the planning of investments, by the local authorities of the county or region.

The amendments made during the second reading concern setting public health and public health development as a core task of local governments, and renaming “county transport centre” as “regional transport centre”.

The Act enters into force on 1 January 2018 in the main part. The amendments relating to the implementation of administrative reform partially enter into force on the day following the date of publication in the Riigi Teataja and partially on the day of the announcement of the results of the election of municipal councils.

Andres Metsoja, who took the floor on behalf of the Pro Patria and Res Publica Union Faction during the debate, supported the Bill.

The Riigikogu approved with 52 votes in favour (24 against) the Act on Amendments to the Forest Act and the Nature Conservation Act (396 SE), initiated by the Government, which makes the making of forest management decisions clearer for forest owners. Major amendments to the Forest Act provide for lowering of the rotation age of spruce stands in fertile site types, and the promotion of the use of types of cutting alternative to clear cutting – shelterwood cutting and selective cutting. The Act mitigates the restrictions imposed thereon. The rules concerning these types of cutting in force at present do not facilitate effective forestation.

According to the Act, the average age for spruce stands growing on fertile sites of habitat permitted to be cut is lowered to 60–70 years. At the moment, the average age of spruce stands to be cut must be 80 years as a minimum. However, the quality of the 80-year-old forest in fertile areas is lower because around a third of such forest is mostly damaged due to root or trunk rot. The amendment concerns about 4200 hectares of forest land, which is 0.2 per cent of Estonian forests, and 3000 hectares of it is state forest. The minimum rotation age does not oblige forest owners to cut. In counterbalance, in order to protect the biodiversity of Estonian forests, strict protection of fresh boreo-nemoral forests and fresh boreal forests to the extent of an additional 27,000 hectares is ensured. The respective areas have been found on state lands, and the State Forest Management Centre has suspended the management of forests there.

The Act precludes situations where the use of the ownership of a forest depends on the decisions and activities of a bordering neighbour. At the same time, restrictions on the size of key habitat which is up to 7 hectares at present are eliminated. On state land, protection is ensured to all areas that conform to the definition of key habitat. On private lands, protection continues on a voluntary basis.

The amendments made during the second reading concern setting restrictions on the size of a regeneration cutting area, preferring private forest owners with smaller forest ownerships as recipients of support, cutting areas, the validity of the requirement of the qualification of harvester driver, and the entry into force of the Act which is scheduled for 1 September this year.

Artur Talvik, who took the floor on behalf of the Free Party Faction in the debate, said that the Free Party Faction would vote against the Bill.

In the opinion of Eerik-Niiles Kross, who took the floor on behalf of the Reform Party Faction, it had not become clear in the course of the proceedings on the Bill why it was necessary to lower the age for spruce stands permitted to be cut to 60 years.

Peeter Ernits, who took the floor on behalf of the Centre Party Faction, said that the Centre Party Faction would vote in favour of this Bill, but it was difficult for him to be in favour of it personally.

In the opinion of Marko Pomerants, who took the floor on behalf of the Pro Patria and Res Publica Union Faction, one of the most important amendments was that the state would establish a national forest register.

Rainer Vakra, who took the floor on behalf of the Social Democratic Party Faction, pointed out the amendments proposed by the Environment Committee that would reduce the pressure to cut forest.

The Riigikogu approved with 84 votes in favour the Act on Amendments to the Sport Act and the Administrative Co-operation Act (423 SE), initiated by the Government. The Act continues the sports funding reform which aims to create a transparent and solid financial basis for sports organisations to operate. The amendment allows the Ministry of Culture to focus more on the shaping of sports policy because the workload in making individual decisions will diminish.

The Riigikogu approved with 80 votes in favour the Act on Amendments to the Study Allowances and Study Loans Act and the Work Ability Allowance Act (417 SE), initiated by the Government, which provides that the state writes off study loans of parents of children with a severe disability. In addition, the processing of the write-off of study loans by the state is made more efficient and faster.

Under the current procedure, a person who has taken a study loan has the right to apply for a write-off of the study loan by the state when he or she loses capacity for work or when his or her child has a profound disability. Starting from 1 January 2018, parents whose child is identified as having a severe disability will also have the right to write-off of a study loan by the state.

At present, in the processing of the write-off of study loans, the person contacts the credit institution who granted the study loan, and the credit institution submits an application for writing off the study loan to either the Ministry of Finance (if the recipient of the loan is identified as having no ability to work) or the Ministry of Education and Research (if a child of the recipient of the loan is identified as having a profound disability). The ministries check the circumstances that give the right to write-off of the study loan and pay to the credit institution the amount owed by the recipient of the loan. Such proceedings have proved to be too slow.

According to the Act, for a study loan to be written off by the state, an application has to be submitted to the Social Insurance Board who has got the data necessary for the write-off of the study loan or for whom such data are available under law.

The Riigikogu approved with 78 votes in favour the Act on Amendments to the Work Ability Allowance Act and Amendments to Other Acts (468 SE), initiated by the Social Affairs Committee, which eliminates deficiencies in Acts concerning the work ability reform. The Act amends the Work Ability Allowance Act, the Social Benefits for Disabled Persons Act, the Health Insurance Act and the Labour Market Services and Benefits Act.

The amendments to the Work Ability Allowance Act eliminate the problems that have appeared in the payment of work ability allowance. The Act amends the conditions for advance payment of work ability allowance in order to avoid situations where, for reasons beyond the control of the person, he or she has no income during the transfer from the pension for incapacity for work to payment of work ability allowance.

The conditions for payment of work ability allowance are also reorganised in order to facilitate the acquisition of education for people with partial capacity for work, to avoid unfair reduction of work ability allowance, and to ensure the receiving of work ability allowance also when the person cannot meet the requirements necessary to receive work ability allowance due to undergoing hospital treatment.

The conditions for establishing disability are amended in the Social Benefits for Disabled Persons Act, and payment of dental care benefit to persons who have an increased need for dental care service are amended in the Health Insurance Act.

One of the most important amendments made during the second reading concerns making the obligation to draw up rehabilitation plans for children applying for identification of a degree of severity of disability needs-based.

As it is necessary to amend the list of health services on the basis of the dental care benefit amendment included in the Act, the date of entry into force of that provision is 1 January 2018. Other amendments in the Act enter into force on 1 July this year.

The Riigikogu approved with 76 votes in favour (4 against) the Act on Amendments to the Republic of Estonia Principles of Ownership Reform Act (434 SE), initiated by the Government. The amendments eliminate the legal vacuum in the processing of restitution claims and terminate the acts of restitution and compensation of property for the most part before the structural changes related to administrative reform.

The terms for completion of the acts for restitution of unlawfully expropriated property and awarding compensation, provided for in the Republic of Estonia Principles of Ownership Reform Act, expired last year. However, restitution claims of approximately 400 persons remained outstanding by the end of the year, and in half of the cases local governments cannot set new deadlines for further processing of the claims.

The Act proposes measures for the continuation and quick termination of the process of restitution of and compensation for unlawfully expropriated property. According to the Act, local governments have additional powers to continue the processing of the claims in the case of which it was impossible to complete the processing by the existing due dates for reasons independent of the entitled subjects.

The Riigikogu approved with 52 votes in favour (34 against) the Act on Amendments to the Traffic Act and Amendments to Other Associated Acts (419 SE), initiated by the Government, which establishes a road user charge for lorries with a gross laden weight exceeding 3500 kilogrammes and their trailers. The rate of the road user charge depends on the gross laden weight, the EURO-emission class and the number of axles of the lorry and its trailer. The daily road user charge rate remains between 9 and 12 euro, and the annual road user charge rate remains between 500 and 1300 euro. In addition, it is possible to pay the road user charge for a week, a month or a quarter.

Vehicles of the Defence Forces, the Defence League, the armed forces of foreign states, the Police and Border Guard Board and rescue agencies and vintage vehicles within the meaning of § 83 of the Traffic Act are exempt from the road user charge.

Time-based and distance-based road user charges are used in the European Union. Time-based road user charge for lorries is established in Estonia as it has the advantages of a lower investment and maintenance cost and a system similar to those implemented in Latvia and Lithuania.

The Road Administration and the Tax and Customs Board will administer the charge. It will be the task of the Road Administration to ensure the possibility to pay the road user charge on a 24-hour basis, and the Act gives the Road Administration the right to enter into a contract under public law with a legal person in private law to create the possibilities to pay and to organise the possibilities to pay the road user charge. Possibilities to pay the road user charge on the Internet will also be implemented.

The Police and Border Guard Board and the Tax and Customs Board will exercise state supervision over the payment of the road user charge for lorries within the framework of the performance of their other functions. The Road Administration is also given the right to exercise state supervision.

Külliki Kübarsepp, who took the floor on behalf of the Free Party Faction, Toomas Kivimägi, who took the floor on behalf of the Reform Party Faction, and Martin Helme, who took the floor on behalf of the Conservative People’s Party Faction in the debate, did not support the Bill.

The Riigikogu approved with 83 votes in favour the Act on Amendments to the Traffic Act, the Motor Insurance Act and the State Fees Act (406 SE), initiated by the Government. The Act transposes the EU directives concerning the roadworthiness test for vehicles and the inspection of the roadworthiness of vehicles in the course of exercising traffic supervision. The deadline for the transposition of the directive was 20 May this year.

Under the Act, in the future, it will be allowed to use in traffic during 30-60 days vehicles in which deficiencies that are not dangerous have been discovered in a roadworthiness test or in the course of exercising traffic supervision (it is not allowed to participate in traffic with a dangerous fault). Under the current Act, such a vehicle may be driven only to a repair centre or roadworthiness test centre, or back to the car park.

The Act abandons the obligation of roadworthiness test for vehicles used on small islands of Estonia. Roadworthiness test continues to be mandatory in Hiiumaa, Muhu and Saaremaa. Under the current Act, all vehicles used in traffic must pass a roadworthiness test regardless of where the vehicle is used. At the same time it is not expedient to carry out the tests on vehicles used only on small islands where the intensity of using the vehicle and the traffic density is low. A roadside inspection has to be performed if a vehicle which is otherwise used on a small island is to be used in traffic outside the small island.

The Act provides that the establishment of the limit for the fee charged for the roadworthiness testing is transferred from the Act to the Regulation of a minister. In the establishment of the limit, it has to be taken into account that companies engaged in roadworthiness testing would be able to bear the direct expenses relating to the service, the capital expenditure and a proportional part of the overheads and make a reasonable operating profit.

During the second reading, a motion to amend was introduced to change the situation where a permanent resident of Estonia obtains a driving licence in a country where the requirements for obtaining the right to drive are more lenient. Such driving licence can be exchanged for an Estonian driving licence after successful passing of the driving theory test and driving test required to obtain the right to drive. At the same time, the amounts of the pecuniary punishment for natural person for manipulating the odometer were increased from 50 fine units to 100 fine units, and the punishment for a legal person was increased from 1200 euro to 3200 euro.

The Riigikogu approved with 86 votes in favour the Act on Amendments to the Traffic Act (399 SE), initiated by members of the Riigikogu Erki Savisaar, Viktor Vassiljev, Raivo Põldaru, Arno Sild, Jaanus Marrandi, Aivar Kokk, Einar Vallbaum, Kalle Palling, Kristen Michal, Artur Talvik, Kalvi Kõva, Krista Aru, Liisa Oviir and Märt Sults, which establishes the definition of at least partially automatically moving vehicles moving at low speed mainly on pavement, and the requirements for such vehicles in traffic.

The new term in the legal language, “self-driving robot”, that is used in the Act, means a partially of fully automatic or remotely controlled vehicle that moves on wheels or other chassis in contact with the ground and uses sensors, cameras or other devices to obtain information about the surrounding environment and, using the information obtained, is capable of moving partially or fully without the immediate control of the driver, with a maximum design speed not exceeding 6 km/h.

The aim of the Act is to contribute to the activities of innovative enterprises in Estonia. The “last-kilometre delivery of parcels”, be it home delivery of parcels arriving from a long distance, or shopping that has become an everyday habit for all of us, accounts for ca 20–40 per cent of the total cost of parcel delivery. The trend is towards the use of robots in this sector to reduce this cost. According to estimates, in ten years today, up to 80 per cent of that last stage of parcel delivery could be performed by robots.

The Riigikogu approved with 86 votes in favour the Act on Amendments to the Public Transport Act, the Traffic Act and the State Fees Act (188 SE), initiated by members of the Riigikogu Einar Vallbaum, Ivari Padar, Vilja Toomast, Andre Sepp, Kalle Palling, Johannes Kert, Remo Holsmer, Jüri Jaanson, Ken-Marti Vaher, Meelis Mälberg, Laine Randjärv, Anne Sulling, Marko Mihkelson, Urve Tiidus, Toomas Kivimägi, Jaanus Marrandi, Deniss Boroditš, Heidy Purga, Keit Pentus-Rosimannus, Tanel Talve, Eerik-Niiles Kross, Kalle Laanet, Igor Gräzin, Juhan Parts, Kristjan Kõljalg and Martin Kukk, which regulates platform-based taxi service. The Act provides as a separate type of taxi service carriage of passengers that is provided via an information society service, in the case of which both the ordering and the calculation of price takes place through an IT-platform. The Act eliminates the requirement of a taxi driver training course, and every carrier has to take care of the organisation of the trainings.

As a result of the amendments, a flexible and balanced taxi regulation which takes into account different interests and which at the same time does not make any compromises regarding the rights of passengers will be created in Estonia.

The provision of taxi service is made flexible and it is possible to provide the service also “through a platform” via an information society service. If a taxi is ordered and the price is calculated through an information society service, taximeter is not mandatory upon the provision of such service. Also, the price limits established by the local government are not applied, because the consumer can see the price of the ride already when ordering the taxi. In other cases, a taximeter has to be used, for example if passengers are picked up from the street or a taxi stop, or if a taxi is ordered through a call centre.

The amendments made during the second reading concern the elimination of the obligation of a taxi driver training course, and the right of taxi drivers to provide services via an information society platform. Under the Act, it is possible to provide taxi services on the whole territory of Estonia, taking into account the requirements established on the territory of the respective local government.

The Act enters into force on 1 November this year.

Kalle Palling, who took the floor on behalf of the Reform Party Faction during the debate, stressed the importance of the Bill in the development of the sharing economy.

In the opinion of Jaanus Marrandi, who took the floor on behalf of the Social Democratic Party Faction, that was one of the Bills that had been very well discussed and in which a compromise had been found between stakeholders.

In the opinion of Aivar Kokk, who took the floor on behalf of the Pro Patria and Res Publica Union Faction, the transition period of the platform-based taxi service due to enter into force on 1 November was sufficient.

The Riigikogu approved with 83 votes in favour the Bill on Amendments to the Natural Gas Act and the Electricity Market Act (350 SE), initiated by the Government, the purpose of which is to increase the energy security of Estonia, to make Estonian gas market more open, and to promote competition between sellers.

By 1 January 2020, network operators have to install gas meters at household customers whose annual gas consumption exceeds 750 cubic metres.

In order to increase the energy security of Estonia, a gas supply regulation is established regarding household customers and undertakings who produce heat for heating dwellings according to which the system operator must maintain gas supply in a quantity that meets the requirements set out in the relevant EU Regulation.

In the interests of energy security, the Act provides for an obligation that gas supply may be stored only in a European Union country. Gas supply is used when there is a severe disruption of supply in the gas system. According to the Act, a more detailed requirement is provided for the gas system operator, who is Elering Ltd, to maintain a gas supply for household customers and undertakings who produce heat for heating dwellings, to ensure at least 30-day security of gas supply in the event of a supply disruption.

With a view to make Estonian gas market more open and to promote competition between sellers, the system operator is obliged to develop a gas market data exchange platform that allows customers to receive periodic overviews of gas consumption and that enables to switch gas sellers. The Act regulates amendments to the obligation to maintain balance according to which the gas system balance is maintained in units of energy at the agreed pressure of 1 atm and temperature of 0°C.

The administrative burden of gas sellers is reduced with the provision of the Act according to which only registration obligation is required of them, instead of a licence. Gas seller who sells gas to household customers no longer have to coordinate the standard terms and conditions of a contract of sale with the Competition Authority. It is sufficient for the seller to publish the standard terms and conditions on its website.

Gas constitutes a relative low percentage – below 5 per cent – in Estonia’s energy balance. The proportion of gas is increasingly decreasing in district heating in Estonia, gas boilers are being replaced with woodchip boilers. Estonia is essentially an energy island in terms of gas – we are physically separated from the gas system of the rest of Europe. The same holds true also for Finland and Latvia. The majority of the gas used in Estonia is supplied by Gazprom.

The Riigikogu approved with 74 votes in favour (6 against) the Act on Amendments to the Auditors Activities Act and Amendments to Other Associated Acts (409 SE), initiated by the Government, which brings Estonian law into conformity with relevant amended EU documents. In the first place, the organisation and funding of public oversight of auditors’ activities, the distribution of the competence and tasks of the Ministry of Finance and the bodies of the Board of Auditors, and the definition of “public-interest entity” are reviewed.

Under an EU directive, in order to enhance the transparency of auditor oversight and to allow for greater accountability, each Member State should designate a single authority to be in charge of public oversight of statutory auditors and audit firms. Therefore the functions relating to the approval of sworn auditors and the issuing of activity licences that so far were performed by the Ministry of Finance are transferred to the competence of the Auditing Activities Oversight Board of the Board of Auditors. Also, the current control function of the Auditing Activities Oversight Board in audit quality assurance reviews and in disciplinary proceedings is replaced with the function of directly conducting them, which means that the current three-tier-oversight system becomes two-tier. In connection with these amendments, the principles of funding the oversight are adjusted. Besides harmonisation with EU law, the proposed amendments will eventually shorten the processing processes, both reducing the administrative burden and saving costs.

Aivar Kokk, who took the floor on behalf of the Pro Patria and Res Publica Union Faction during the debate, pointed out the reduction of the auditing burden for small businesses in the Bill.

The Riigikogu passed a Resolution:

The Riigikogu approved with 79 votes in favour the Resolution of the Riigikogu “Use of the Defence Forces in the Fulfilment of the International Commitments of the Estonian State in the Defence Capacity Building Programme for Iraq Led by the North Atlantic Treaty Organization” (451 OE), submitted by the Government, which allows to contribute with up to five active servicemen to the Defence Capacity Building Programme for Iraq led by the North Atlantic Treaty Organization (NATO). It is a non-combat programme which is directed against threats to NATO from the south.

Six Bills passed the second reading in the Riigikogu:

The Bill on Amendments to the State Assets Act (455 SE), initiated by the Government, will take the election of members of supervisory boards of state enterprises by an appointment committee to the level of Act. To ensure the stability and greater independence of the work of the appointment committee, a regulation is established that creates the possibility for it to operate as a permanent body. The right of the Minister of Finance to appoint a half of the representatives of the state to the supervisory boards of partially state-owned companies will be repealed. The obligation of the Minister of Finance to regulate the limits of the remunerations paid to members of the supervisory boards of partially state-owned companies will also be eliminated. In the future, a state-owned company will be able to pay subsidies of its area of activity only for research and development activities. Larger state enterprises will begin to follow the rules for disclosing information for publicly traded companies.

The Bill on Amendments to the Funded Pensions Act and the Investment Funds Act (427 SE), initiated by the Government, will extend the choice of pension contracts offered to retiring persons who have joined the pension pillar II (mandatory funded pension). Besides pension contracts with a guaranteed interest rate, life assurance undertakings will be able to offer also pension contracts with an investment risk; the amount of pension paid on the basis of such contracts will depend on the investments made.

In connection with introduction of new contracts, the current principle that only one pension contract can be entered into when retiring will also be changed. In the future, unit-holders will be able to enter into several pension contracts, for example, one with an investment risk and another with a guaranteed interest rate.

In the future, people who will have accrued less money (less than 50-fold national pension rate which is 8797 euro at present) by the moment of retirement will be able to choose between fund pension and a pension contract entered into for a fixed term. So people who will have accrued less money into the pillar II and who do not wish to bear investment risk when they are retired will be able to enter into a fixed-term pension contract where the amount of pension will no longer depend on investment results monthly.

Differently from the usual practice, it will also be possible to exchange pension agreements. The Bill will specify the rules for calculating the surrender value of a pension contract and the conditions for exchanging contracts.

As regards the pillar III, the regulation of insurance contracts for supplementary funded pensions concerning the offering of occupational pension schemes will be amended. Besides the contracts entered into so far, life assurance undertakings will thereby be given the possibility to offer contracts under which no payments are made before the policyholder has attained the retirement age agreed in the contract. With that, conditions for offering insurance contracts for supplementary funded pensions will be created that could increase employees’ motivation to accrue pension for their employees.

The Bill will transpose into Estonian law the relevant EU directive on minimum requirements for enhancing worker mobility between Member States by improving the acquisition and preservation of supplementary pension rights.

Tiina Kangro, who took the floor during the debate, did not support the Bill. In her opinion, the plan to change the funded pension was not in accordance with good legislative practice, and she presented her proposals to amend the Bill.

 Mihhail Stalnuhhin, who took the floor during the debate, defended the process of proceedings on the Bill.

In Andres Ammas’s opinion, the discussion of the motions to amend the Bill would have to be continued in the autumn.

Jürgen Ligi, who took the floor during the debate, explained the principles of the II and III pillars.

For implementation of the special taxation scheme established by the Simplified Taxation of Business Income Bill (454 SE), initiated by the Government, a taxpayer will have to open a special type of account – business account – in a credit institution. If a natural person starts to use such an account, this is deemed to be opting for such a special taxation scheme. The tax liability will be performed by automatic reservation and transfer to the tax authority of the tax amount (in most cases, 20 per cent of the incomes received) from the funds received in the account of the beneficial owner of the income. The administrative burden will be as low as possible – the taxpayer will have no obligation to keep accounts or to submit tax returns. The Bill will facilitate micro-business and improve the tax behaviour of micro-undertakings. To achieve that, the performance of the tax liability arising from the provision of a service and the sale of goods by natural person will be simplified. A special taxation scheme will be established where the data necessary for the taxation will be submitted and the tax liability will be performed in a simplified way.

In the opinion of Krista Aru, who took the floor during the debate, it was impossible to estimate how big the group of users of business account would be.

In the Sugary Drink Tax Bill (457 SE), initiated by the Government, sugary drink with a sugar content of at least 5 grams per 100 millilitres of drink, or with a sweetener added, will be the object of taxation. The tax rate depends respectively on either the sugar content or the adding of sweetener.

The term “sugary drink” also covers milk-based drinks, that is, milk drinks, containing sugar or sweetener. Such drinks include for example sweet drinkable yogurts, kefirs, as well as sweet plant milks, for example soy milk. A permission to grant state aid for sweet milk drinks and 100 per cent fruit and vegetable juices will be applied for from the European Commission, and thereafter they will be excluded from the scope of regulation of this Act. Sweet milk drinks and juices will not be subject to the sugary drink tax once the permission is obtained.

In order to allow time for producers to change the recipes of their products if they wish, and for consumers to become used to new tastes, the Bill will provide for a two-year transition period for the taxation of drinks with a higher sugar content. In relation to the implementation of the Act it is also worth noticing that, as at 1 January 2018, not all sugary drinks in interim warehouses of Estonia will be taxed automatically. Sugary drink delivered to the Estonian interim warehouses will be subject to tax upon making it available for the first time upon issue from the warehouse, and tax liability will arise only in the case of sugary drink that is issued to make it available in Estonia. Sugary drink exported from Estonia will not have to be taxed. All drinks delivered to the place of sale before 1 January 2018 will be exempt from tax. Places of sale do not have so many possibilities for storage as interim warehouses do, and therefore such drinks will not the subject to tax with a view to reducing the administrative burden.

In the opinion of Aivar Sõerd, who took the floor during the debate, the proceedings on the Bill had come to a deadlock, and the sugary drink tax was discriminating. Sõerd moved to suspend the second reading of the Bill on behalf of the Reform Party Faction.

Monika Haukanõmm said that the Bill was motivated by the argument of public health, but the health objective set was unachievable. In her opinion, the aim was to get 15-18 million euro to the state budget from the sugary drink tax. Haukanõmm moved to suspend the second reading of the Bill on behalf of the Free Party Faction.

Hanno Pevkur, Urmas Kruuse, Igor Gräzin, Lauri Luik and Arto Aas, who took the floor during the debate, did not support the Bill.

35 members of the Riigikogu voted in favour of the motion to suspend the second reading of the Bill, and 53 voted against. The motion was not supported and the second reading of the Bill was concluded.

The Bill on Amendments to the Income Tax Act and Amendments to Other Associated Acts (458 SE), initiated by the Government, will amend the rules for the taxation of share options provided for in the Income Tax Act, provide for a lower income tax rate of 14 per cent for regular profit distributions of companies, establish an “advance income tax” for credit institutions and amend the bases for calculating the price of the fringe benefit for the use of automobile.

According to the Bill, in the future, upon enabling the use of an enterprise’s automobile both for work-related and personal trips, fringe benefit can be declared only on the basis of kilowatts, regardless of the distance covered in private trips. The price of the fringe benefit for the use of automobile will be determined, according to the Bill, on the basis of 1.96 euro per unit of engine power of the automobile indicated in the traffic register, and 1.47 euro per unit of engine power of the automobile if the automobile is older than five years.

Amendments that concern filing a joint income tax return by spouses were made to the Bill. The establishment of the income tax pledge was omitted from the Bill, and the procedure for the taxation of hidden profit distributions was specified, tax incentives on the organisation of transport by employer were extended, and several technical amendments were made.

A resident natural person will have the right to deduct increased basic exemption of 2160 euro for his or her resident spouse, if the spouse has not deducted it, from the income which the resident natural person receives during the period of taxation. The amount deducted additionally may not exceed 50 400 euro. The amendment concerns already the declaration of this year’s incomes in the beginning of next year.

The Bill will specify the procedure for the taxation of hidden profit distributions. The provision on tax evasion that will be added specifies that the Tax and Customs Board may charge income tax on a loan granted to a shareholder or a member if the circumstances of the transaction indicate that it is essentially a profit distribution. If the term for repayment of a loan granted to the parent undertaking or a “fellow subsidiary” is longer than 48 months, the obligation to prove the ability and intention to repay to the loan will lie with the taxpayer at the request of a tax authority.

According to an amendment, employer’s business-related expenses incurred to transport an employee employed on the basis of an employment contract between his or her residence and his or her place of employment if the place of residence of the employee is located at at least 50 kilometres distance from the place of employment or if the employer organises the transport with a vehicle that has at least eight seats or with a bus within the meaning of the Traffic Act, will not be deemed to be fringe benefit.

According to a motion to amend, if the Act is adopted, it will enter into force on 1 August this year, but some provisions of the Income Tax Act and the Value-Added Tax Act will enter into force on 1 January 2018.

In the opinion of Remo Holsmer, who took the floor during the debate, the aim of the Bill was to solve budget problems. Holsmer said that the Reform Party Faction supported some proposals, for example lower taxation of share options, but did not support the Bill as a whole.

Andres Ammas saw the elimination of travel logs as a positive example in the Bill, but reproached the coalition for the hasty proceedings. Ammas said that the Free Party Faction did not support the Bill and moved to suspend the second reading of the Bill.

Aivar Sõerd, who took the floor during the debate, did not support the Bill.

Maris Lauri supported the lower taxation of dividend payment, but she gave a poor assessment of the Bill and on behalf of the Reform Party Faction moved to suspend the second reading of the Bill.

34 members of the Riigikogu voted in favour of the motion to suspend the second reading of the Bill, and 56 voted against. The motion was not supported and the second reading of the Bill was concluded.

The Bill on Amendments to the State Budget Act (456 SE), initiated by the Government, will provide for increasing the informativeness of the state budget. For that, information concerning the three years following the budgetary year will be submitted to the Riigikogu together with the state budget. The requirements for the information will be specified. Among other things, accrual-based forecasts will be added.

Also, bureaucracy will be reduced. For that, the budget strategy and the budgeting processes will be merged. The Bill provides for looking at fiscal policy in a several years’ perspective, for which the rule of budget balance will be observed as an average of several years. The surpluses of earlier years will be enabled to be used to make investments to the extent of up to 0.5 per cent of GDP.

During the proceedings in the Riigikogu, many amendments were introduced into the Bill on the basis of letters that the Finance Committee had received. The most important one of them concerns liquidation of possible conflicts with the Constitution. The amendments will preserve the classification between the ministries in the state budget. This means that the provisions under which the Riigikogu would have allocated funds to the Government in the state budget, and the Government would have classified the funds between the ministries, will be omitted and amended. The principle of administrative classification will be preserved, and the obligation for the Government to submit the budget strategy to the Riigikogu immediately after approval will be restored. The need of the Council for Administration of Courts to participate in the process of forming the budget of the courts of first instance and the courts of appeal was taken into account.

It is provided that, as a general rule, it will be possible to change the distribution between the areas of government of the ministries only with amendment of the state budget. The Riigikogu also supported the proposals according to which planned foreign supports would be included in the budget strategy by years, and an overview of the use of the state budget funds would be given to the Government of the Republic at least twice a year. The provisions concerning the entry into force of the Act were also specified.

In the opinion of Jürgen Ligi, who took the floor during the debate, the Bill involved a disruption of the structural budget balance. Ligi said that living beyond means meant a structural deficit and would force the following Governments to make cuts.

Andres Herkel was concerned that the role of the Riigikogu in the state budget proceedings would diminish. Herkel moved to suspend the second reading of the Bill on behalf of the Free Party Faction.

In Hanno Pevkur’s opinion, the Bill proposed stealing at the expense of both the past and the future, and the state could not let the budget go into deficit. Pevkur moved to suspend the second reading of the Bill on behalf of the Reform Party Faction.

Maris Lauri, who took the floor during the debate, did not support the Bill.

In Jüri Adams’s opinion, it was impossible to add to the Constitution that the budget should be balanced.

Eiki Nestor, who took the floor during the debate, said that Estonia complied with the euro area rules. In Nestor’s opinion, taxes would have to be raised in the future, because EU supports would decrease in 2021 and the budget would have to be balanced.

33 members of the Riigikogu voted in favour of the motion to suspend the second reading of the Bill, and 54 voted against. The motion was not supported and the second reading of the Bill was concluded.

The Riigikogu suspended the second reading of a Bill:

The Bill on Amendments to the District Heating Act (264 SE), initiated by the Government, will encourage heating undertakings to use more stable, more environmentally sustainable and cheaper fuel. The aim is to ensure to district heating consumers as favourable and stable heat energy price as possible, together with as effectively as possible organised heat supply. Lowering of the district heating price requires large-scale investments for which the investor needs a long-term and stable regulation. For that, the Bill provides for enabling greater profitability if the investment ensures a significantly more favourable district heating price for the consumer. To ensure more stable regulation, a regulation that so far was in the methodology of the Competition Authority will be introduced into the Act. An important amendment in the Bill is also the scrutiny of the buyer of a heating undertaking operating in a larger network area. Similarly to the scrutiny before buying a natural gas transmission network, according to the amendment, a buyer of a boiler plant or heat pipeline operating in an area with an annual sales volume exceeding 50 GWh will also have to undergo a scrutiny from the internal security standpoint performed by the Ministry of the Interior. Tallinn, Narva, Tartu, the interconnected network area of Ahtme-Jõhvi and Kohtla-Järve, Sillamäe, Pärnu, Viljandi and Jämejala, Kuressaare, Võru, Haapsalu, and Paide network area are areas with an annual sales volume exceeding 50 GWh. The amendment will increase energy security. The Bill will provide for an obligation of local governments to draft a decision on the planning of the development of the heating sector by 31 December 2017 at the latest. This decision will provide for the future perspectives of the district heating network area located in the administrative territory of the local government for at least ten years. To support the analysis which will be the basis for the decision, a grant aid support measure has been established, which will allow the covering of up to 90% of the costs of the analysis.

Member of the Economic Affairs Committee Jaanus Marrandi said that the Economic Affairs Committee had made a proposal to suspend the second reading of the Bill because the issues of the reference price for thermal energy needed additional analysis. The deadline for motions to amend is 18 September.

Aivar Kokk, who took the floor during the debate, supported the suspension of the second reading of the Bill.

In Mihhail Stalnuhhin’s opinion, the reference price for thermal energy should be taken out of the Bill.

In the debate, Jaanus Marrandi supported the incorporation of the reference price into the Bill.

Toomas Kivimägi was concerned that the new deadline for motions to amend was too short.

Verbatim record of the sitting (in Estonian)

Video recordings of the sittings of the Riigikogu can be viewed at https://www.youtube.com/riigikogu

(NB! The recording will be uploaded with a delay.)

Riigikogu Press Service
Kati Varblane
T: 631 6353, 516 9152
kati.varblane@riigikogu.ee
Questions: press@riigikogu.ee

 

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