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At today's sitting that lasted for more than eleven hours, the Riigikogu passed the Acts concerning tax changes, established an annual refund for low-salaried people and decided to raise the child benefit and family benefits. The Riigikogu did not support the motion to express no confidence in Prime Minister Taavi Rõivas, initiated by 33 members of the Riigikogu.

The Board of the Riigikogu amended the agenda that had been drawn up earlier and, on the proposal of the Government, the motion to express no confidence in Prime Minister Taavi Rõivas, initiated by 33 members of the Riigikogu, was deliberated as the second item on the agenda. 41 members of the Riigikogu voted in favour of the motion to express no confidence and 59 were against which means that the Riigikogu did not support the expression of no confidence in Taavi Rõivas.

Prime Minister Taavi Rõivas explained that shifting the tax burden from taxation of labour force towards taxation of consumption would facilitate economic growth. “The less taxes we impose on the income earned with the hard work of the people, the better competition conditions we create for Estonia so that more jobs would be created here, the more domestic and foreign investments this policy brings to Estonia, the faster the economy can grow. Reducing the taxes on labour has a favourable impact on economic growth,” Rõivas said.

“I totally understand that in short perspective people are not satisfied that the fuel excise duty will rise,” said Prime Minister Rõivas. “But I consider it my duty to explain to people that all this is in the name of greater purposes, so that we could sustainably grow as an economy, that taxes on labour could be reduced in Estonia, that it would be possible to improve the subsistence of families with children, significantly increase the benefit for the third child, that it would be possible to support single pensioners and single parents through the single pensioners support measure, which we plan to implement from the year after the next year, and also found the maintenance allowance fund for single parents,” Rõivas said.

In the opinion of the Prime Minister, the Social Democratic Party, the Pro Patria and Res Publica Union and the Reform Party have formed a government whose mission is to solve the great challenges faced by Estonia. “The Government with its budget strategy has created possibilities for supporting the agreed upon great aims and at the same time keeping the revenues and expenditures of the state balanced during the next four years,” Rõivas said.

During nearly two hours, Prime Minister answered questions from 37 members of the Riigikogu in total. Kadri Simson, Martin Helme and Andres Herkel took the floor on behalf of factions during the debate.

As the first item on the agenda, the Riigikogu passed with 58 votes in favour and 41 against the Act on Amendments to the Social Tax Act, the Income Tax Act and Other Acts (41 SE), initiated by the Government. The Act establishes the rate of social tax at 32.5 percent in 2017 instead of the current 33 percent , and at 32 percent starting from 2018. The Act provides for a raise of tobacco and alcohol excise duty in the coming years, and a rise of fuel excise duty over the next three years, instead of four years as initially planned.

The Minister of Finance Sven Sester stressed in his speech that the Bill was important as a source for covering the implementation of the Bills that had been declared to be a matter of confidence, but with this particular Bill the rate of general basic exemption would be raised over four years so that it would amount to 205 euro per month by 2019. Sester added that the increasing of the daily allowance for assignments abroad would have a favourable impact on the business environment.

Sester noted that nearly 200 motions to amend the Bill had been submitted. However, as the Government had decided to declare the passage of the Bill to be a matter of confidence at its sitting on 10 June, the obligations of the Finance Committee with respect to the Bill had terminated, and the Government had reviewed the motions to amend and made decisions on them.

The Government had refused to incorporate into the text a large part of the motions to amend that, as the Minister of Finance said, had provided for the tax changes to be cancelled or reduced in various ways which would have resulted in reduced accruals to the state budget. Sester noted that the Act was an integrated package of tax changes based on the Government coalition programme as a result of which the tax burden would shift from the workforce more towards consumption.

The Bill concerning tax changes was deliberated during nearly six hours at the additional sitting. 32 members of the Riigikogu took the floor during the debate.

As the third item on the agenda, the Riigikogu deliberated the Bill on Amendments to the Labour Market Services and Benefits Act and Other Acts (40 SE), initiated by the Government. The Riigikogu supported the establishment of an annual refund for working people with low incomes. The aim of the refund will be to encourage people to accept jobs or stay in the labour market even when the remuneration received for working is small.

According to the Act, the amount of the refund of income tax will depend to a significant extent on the income earned, the number of months worked, and the structure of the income. Therefore, the refund may be different for each person. The amount of refund of income tax will grow with the increase of income and it will be the highest at a gross salary of 480 euro (708 euro per year). In the case of income exceeding this amount, the amount of refund will begin to decrease and will reach zero at a gross salary of 649 euro.

When presenting the Bill, the Minister of Finance Sven Sester said that the amendment would significantly improve the situation of low-salaried people, reduce poverty and support economic growth.

Sester also explained the motions to amend that the Government had incorporated into the text. One of them eliminates the requirement to work full-time in the case of persons receiving the pension for incapacity for work. As a result of this amendment, they will have the right to apply for a refund also if they work part-time. However, they are also subject to the requirement that the working must be continuous, that is, at least six months during the calendar year.

Sester noted that, as a result of the amendment, the planned refund system would be in conformity to the essence of incapacity for work and encourage also persons receiving the pension for incapacity for work to accept jobs and stay in the labour market.

The Government had also incorporated in the text the motion to amend that specified the connection between the joint income tax returns filed by spouses and the determining of the upper limit of the refund.

The deadline for the payment of the refund is 1 July at the latest.

Sester replied to questions of opposition MP-s. Tarmo Tamm, Mihhail Korb, Monika Haukanõmm, Jüri Adams and Viktor Vassiljev took the floor during the debate.

At the final vote, 59 members of the Riigikogu supported the passing of the Act and 34 were against.

As the fourth item, the Riigikogu discussed the Bill on Amendments to the State Family Benefits Act and Amendments to Other Associated Act (38 SE), initiated by the Government.

The Minister of Social Protection Margus Tsahkna said that the raising of family benefits would help improve the subsistence of families and mitigate the poverty of children.

Members of the Riigikogu Jevgeni Ossinovski, Vilja Savisaar-Toomast and Mailis Reps who took the floor in the debate supported the raising of family benefits. Reps said that the Centre Party Faction supported the raising of child benefit but as the Government had declared it to be a matter of confidence they were not going to vote either in favour or against the Act.

The Act gained 62 votes in favour in the Riigikogu, nobody was against and there were six abstentions.

With the Act, the child benefit for the first and the second child of the family rises to 60 euro per month and a new benefit for families with many children is established. So the child benefit will be 50 euro starting from 2016, and 55 euro starting from 2018, and will increase to 60 euro starting from 2019.

The amount of child benefit starting from the third child will not change, and it will continue to be at 100 euro per child.

At the same time a new family benefit, the benefit for families with many children, is established for families with three or more children.

This benefit amounts to 200 euro for families raising three to six children, and to 370 euro for families with seven or more children. The existing parental benefit for parents raising seven or more children is abolished as a separate benefit.

At the first additional sitting, the Riigikogu also concluded the second reading of the Bill on Amendments to the Earth’s Crust Act and the Environmental Charges Act (43 SE), initiated by representatives of four factions, and decided to send the Bill to the third reading at the second additional sitting today.

The Chairman of the Environment Committee Rainer Vakra made a report and underlined that more flexible mining of oil shale is interrelated with social, economic and environmental impacts.

Artur Talvik who took the floor during the debate moved to suspend the second reading of the Bill but, with 14 votes in favour and 56 against, it was not supported. Deniss Boroditsh and Jaanus Karilaida also took the floor.

The first additional sitting began at 11.00 a.m. and ended at 10.19 p.m. The second additional sitting will begin one hour after the end of the first additional sitting, that is, at 11.19 p.m.

Verbatim record of the sitting (in Estonian). 

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

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

Photos of the sitting: https://fotoalbum.riigikogu.ee/v/Riigikogu/XIII+Riigikogu/15062015/

Riigikogu Press Service

Epp-Mare Kukemelk

T: 631 6356, 515 3903

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Queries: [email protected]