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The Riigikogu did not support the proposal of the Chancellor of Justice Ülle Madise to amend the Act raising the excise duty rates for low-alcohol beverages. The Constitutional Committee and the Finance Committee found that the Act on Amendments to the Income Tax Act, the Social Tax Act and other Acts (302 SE), passed by the Riigikogu last year, was in conformity with the Constitution. 34 members of the Riigikogu voted in favour of the proposal of the Chancellor of Justice and 49 voted against. There were no abstentions.

The Chancellor of Justice stressed that since alcohol was one of the greatest causes for health damage, imposing restrictions on the production, sale and consumption of alcohol was in principle necessary and justified, but nevertheless this must not be done in violation of the Constitution.

The Chancellor of Justice said that there were three issues in today’s discussion, and they all fit under a single denominator. „if and to what extent the principle of legal certainty applies in the legal space of Estonia – and it has three subquestions: in what matters and to what extent the Riigikogu can make promises with deadlines, if and on what conditions such promises can be broken prematurely, and to what extent a Government coalition, by establishing promises with deadlines, can restrict the possibility of following coalitions to pursue their policies. So it is a question of the rule of law, a legitimate expectation, and the predictability of the business environment,” Madise said before the Riigikogu.

The Act on Amendments to the Income Tax Act, the Social Tax Act and Other Acts (302 SE), passed in the Riigikogu, provides for raising the excise duty rates for low-alcohol beverages as of 1 July 2017 and 1 February 2018. In the opinion of the Chancellor of Justice, this constituted a violation of the freedom of enterprise provided for in § 31 of the Constitution in conjunction with the principle of legitimate expectation arising from § 10 of the Constitution. A legitimate expectation had arisen for undertakings, in the opinion of Ülle Madise, when, with the regulation technique used in raising the excise duties in 2015, the state had made a promise not to raise the excise duty rates in 2017 and 2018. As the Riigikogu did not support the proposal of the Chancellor of Justice, Madise said that she was obliged to file an action with the Supreme Court.

The Chairman of the Constitutional Committee of the Riigikogu Ken-Marti Vaher gave an overview of the discussion that had been held in the Committee. He stated that the Constitutional Committee did not support the proposal of the Chancellor of Justice because the regulation in question did not involve a violation of a legitimate expectation. Vaher said that sufficient advance notice had been given, and that the excise duty rise would not be too sudden as the rate would be raised in two stages. Also, the establishment and amendment of “tax ladders” is in line with the current legal practice which has so far been in conformity with the Constitution.

The Chairman of the Finance Committee Mihhail Stalnuhhin also gave an overview of the issues that had been discussed in the committee, and stated that the Finance Committee did not support the proposal of the Chancellor of Justice.

Representatives of factions who took the floor during the debate pointed out various aspects related to the problems.

Jürgen Ligi said that the current raising of alcohol excise duty was unprecedented. Ligi stressed that in this case both the argument relating to the budget and the argument relating to public health were weak.

Kalvi Kõva explained that the aim of the amendment was to reduce the difference between the excise duty rates for strong alcoholic beverages and low-alcohol beverages, and consequently to reduce the availability of low-alcohol beverages.

Aivar Sõerd stated in his speech that, when shaping alcohol policy, the neighbouring countries must be taken into account, and in his words these amendments directed tax money to Latvia.

Kersti Sarapuu pointed out that continuation of the current alcohol policy would mean continuing significantly lower taxation of low-alcohol beverages as compared to strong alcoholic beverages.

Urmas Kruuse added that we need a discussion as to what could be the issues that no coalition can change offhandedly.

Andres Ammas stated that the argument about the protection of public health was hypocritical. The Free Party Faction supported the proposal of the Chancellor of Justice.

The Riigikogu passed two other Resolutions and an Act.

The Riigikogu passed with 78 votes in favour the Act on the Ratification of the Agreement on Amendments to “The Agreement between the Kingdom of Denmark and the Government of the Republic of Estonia for the Promotion and Reciprocal Protection of Investments” and on Termination thereof (379 SE). No member of the Riigikogu was against the Act, and there were two abstentions.

The agreements for the promotion and protection of investments concern areas that are regulated by European Union law – they concern in particular the freedom of establishment and the free movement of capital and payments. Thus, protection of investments and equal treatment of investors is regulated by European Union law, and there is no need for bilateral agreements between member states. However, these agreements may go into conflict with European Union law when, in the resolution of a dispute by an arbitral tribunal, material questions concerning the interpretation of European Union law arise that should be resolved by the Court of Justice instead of an arbitral tribunal situated in a third country. To preclude such conflicts, the European Commission has deemed it necessary to terminate the mutual agreements between Member States, and has started infringement proceedings against five Member States.

The Agreement must be amended before it is terminated, because it provides that, in respect of investments made during the time that it is in force, the Agreement remains in force for ten years after the termination of the Agreement. The Agreement is amended so that, upon termination thereof, the application of the Agreement is also terminated.

Termination of the agreement between Estonia and Denmark for the protection of investments is necessary in order to ensure that investors from all EU Member States are accorded equal treatment based on European Union legislation. Earlier, Estonia has terminated bilateral agreements on the promotion and reciprocal protection of investments with Italy and Czechia. As regards European Union Member States, Estonia has entered into analogous agreements with Austria, Denmark, Finland, France, Germany, Great Britain, Greece, Latvia, Lithuania, the Netherlands, Poland, Spain and Sweden. The Foreign Affairs Committee was appointed as the lead committee.

The Riigikogu passed with 85 votes in favour the Resolution “Removal of a Member and Appointment of a New Member of the Supervisory Board of the Estonian Health Insurance Fund” (394 OE), which appointed Maris Lauri as a new member of the supervisory board to replace Viktor Vassiljev. There was one abstention.

The Riigikogu also passed the Resolution “Amendment of the Resolution of the Riigikogu “Formation of the Security Authorities Surveillance Select Committee”” (390 OE). Kalle Laanet was appointed as a member of the Security Authorities Surveillance Select Committee to replace Arto Aas, and Arto Aas was appointed as an alternate member. The amendment was needed because Arto Aas was appointed as a member of the Riigikogu study committee to draw up the development objectives for the state reform. 88 members of the Riigikogu voted in favour of the passage of the Resolution, and there was one abstention.

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
Eva Vahur, 631 6592, 53300619
[email protected]
Questions: [email protected]