Under the State Budget for 2018 Bill (521 SE), initiated by the Government, the coming year’s budget is based on an economic growth of 3.3 percent and is planned with a 0.25 per cent deficit.
The Minister of Finance Toomas Tõniste said that, when drawing up the budget, the Government had taken as a basis the latest forecast of the Ministry of Finance according to which real GDP growth would be 3.3 per cent in 2018. According to the forecasts of the ministry, salary growth will be 5.2 per cent, price rise 2.7 per cent and growth of employment 0.4 per cent. “Next year the volume of our gross domestic product will be nearly 24.5 billion euro,” the minister said. According to the forecast of the Ministry of Finance, both a strong growth of export partners and an increase in investments supported such growth. The forecast proceeds from the precondition that external demand will strengthen by 3.8 per cent next year. Against this background, export growth is forecast to amount to 4 per cent, which means that our exporting companies will be able to slightly increase their market share. In Tõniste’s opinion, the import demand from Finland, Sweden and Latvia supports the growth possibilities of the exporting companies here to a greater extent. Russia’s economy is also back on a growth track, contributing positively again to external demand after a three-year decline. Thus, in conclusion, we can say that in 2018 the economic growth will be restored close to the level that is suitable for us, Tõniste said.
The minister explained that government sector budget was as little as 0.25 per cent short of structural balance in GDP calculation. “Our tax burden stays at last year’s level, that is, it will be 34.4 per cent of GDP also next year, and loan burden will fall by 0.4 per cent of GDP, remaining at 8.6 per cent.
According to the Bill, the expenditure and investments volume of the budget will be 10.58 billion euro and the revenue volume 10.33 billion euro. In comparison to 2017, the expenditure will grow by 922 million euro, that is, by 9.5 per cent, and the revenue will grow by 986 million euro, that is, by 10.6 per cent.
Through activities funded from the budget, it is planned to support the four priorities determined in the Government’s state budget strategy: to promote the economic growth of Estonia, to increase the population of Estonia, to strengthen security and to increase social welfare and cohesion.
Representative of the lead committee, the Chairman of the Finance Committee Mihhail Stalnuhhin gave an overview of the proceedings on the budget at committee sitting. In his words, the discussion focus had been on the positions of the Fiscal Council and the Bank of Estonia on the deficit planned in the budget. The budget had also been discussed by sectors with representatives of the ministries. The involvement process in the proceedings of the budget was continuing.
Representatives of factions took the floor during the debate. Jürgen Ligi (Reform Party) was critical of next year’s state budget and said that it had been drawn up irresponsibly. He disapproved of taking the state budget into structural deficit. In Martin Helme’s (Estonian Conservative People’s Party) opinion, Estonian tax policy is irresponsible which has a negative impact on national tax receipts. He thinks that taxes should be lowered instead. Kersti Sarapuu (Centre Party) said that next year’s state budget was directed at the welfare of the people. She stressed that tax burden would not increase. A larger proportion in percentage terms from the proceeds from income tax would be allocated to local governments. Kalvi Kõva (Social Democratic Party) underlined the importance of the tax reform from the point of view of lower-salaried people. In his opinion, the 0.25 per cent structural deficit gave no reason for a dramatic attitude because the trend was towards balancing the budget in the upcoming years. Andres Ammas (Estonian Free Party) noted that the main issue of next year’s budget was budgetary balance. He disapproved of the using of reserves in a favourable time related to economic growth, while reserves should be stored for worse times. Sven Sester (Pro Patria and Res Publica Union) referred to the changes in the state budget allocations that were directed at raising the welfare of the people, and highlighted a number of salary rises planned. He also attached importance to the increasing of appropriations allocated to defence. In his words, the financing of health care would be improved and investments would increase. Next year’s budget is responsible, Sester said.
The Estonian Reform Party Faction moved to reject the Bill on next year’s state budget at the first reading. The result of voting: 36 votes in favour, 52 against. The motion was not supported. The first reading was concluded. The deadline for submission of motions to amend is at 5.15 p.m. on 1 November.
The Riigikogu passed an Act
With the Act on the Approval of the Amendments to the Convention concerning International Carriage by Rail and to its Appendices (474 SE), initiated by the Government, the amendments of 2015 to the Convention concerning International Carriage by Rail (COTIF) and to its Appendices are approved. The Convention regulates international rail traffic; uniform rules concerning the use of wagons and infrastructure as well as the carriage of goods and passengers have been established. The amendments are of specifying nature, contributing to a flexible functioning of the Convention. The budgetary period of the organisation is reduced from the current 6 years to 3 years which also changes the calculation period of the contribution. This allows for better planning of the receipts and more accurate budgeting. 81 members of the Riigikogu supported passing the Act.
The Riigikogu concluded the second reading of five Bills
The Population Register Bill (382 SE), initiated by the Government, contains a new comprehensive updated regulation. The Bill provides for the composition of data in the population register and the procedure for the maintenance of the population register, entry of data on residence in the population register, grant of personal identification code, processing of data, ensuring access to data, and exercise of supervision over these activities.
With an important amendment, the data entered into the population register will be given legal effect. Contact details (e-mail address and telephone number), and vital statistics data based on statements in the case of which the data of source documents are lacking from the register, have no legal effect. The Bill will reduce the deadlines for submission of residential address. Under the current Act, a person must submit the data of a new residence within thirty days after moving to the new residence. In the future, the term will be fourteen days. In addition, the owner of a space will be notified of amendments to the data related to his or her spaces via the e-mail address “eesti.ee”.
The Bill will also make several amendments regarding the maintenance of the register. In granting accesses, the entry into multilateral contracts provided for in the current Act has been eliminated. A new working environment for processing accesses will be created for the processing of applications to gain access and of rights to access.
The Bill on Amendments to the Food Act and the Feed Act (487 SE), initiated by the Government, will incorporate references to the relevant new EU Regulation in the area of novel foods into the Food Act. The main amendment concerns the authorisation procedure for implementation of a novel food. The current authorisation procedure at Member State level will become an EU’s central authorisation procedure. When the Act enters into force, there will be no need for the Advisory Committee on Novel Foods because, in the future, the European Commission will make a decision on authorising the placing on the market of such food and request a safety assessment from the European Food Safety Authority. The explanatory memorandum notes that ‘novel food’ means any food that was not used for human consumption to a significant degree within the Union before 1997.
The Bill on Amendments to the Fisheries Market Organisation Act (465 SE), initiated by the Government, will amend the rules for the organisation of the grant of state aid to fisheries and de minimis aid and for the disclosure of the data concerning such aid. To implement the European Commission Regulation, a procedure that increases the transparency of the granting of the aid will be established.
According to the national procedure rule, the grantor of aid will have to disclose the grantings of state aid to fisheries that exceed 30 000 euro on the relevant website through the Ministry of Rural Affairs. The European Commission has created a single voluntary web application TAM (Transparency Award Module) for Member States. Disclosure of data through the application is less costly and burdensome than the creation of a separate single website with an efficient search and download function.
At the same time, grantors of aid (the Estonian Agricultural Registers and Information Board, foundations, including the Environmental Investment Centre, the Rural Development Foundation, etc.) will be obligated to register the information concerning state aid in the register of the granting of state aid created under the Competition Act. This will simplify the monitoring of various ceilings for the aid.
The Bill on Amendments to the Money Laundering and Terrorist Financing Prevention Act (459 SE), initiated by the Government, is a new version of the earlier Act. With the establishment of new international standards on combating money laundering and the financing of terrorism, and the transposition thereof into European Union law. Changes will be provided for to the range of services of the commercial register. In the future, legal persons will be able to keep the data of their beneficial owners and other persons will be able to view these data electronically through the commercial register. In addition, the transmitting of information on bank and payment accounts to the competent authorities will be regulated.
The Bill on Amendments to the Insurance Activities Act and Amendments to Other Associated Act (429 SE), initiated by the Government, will transpose the EU directive regulating the requirements for insurance distribution. The aim of the directive is to harmonise the requirements for insurance distribution in different insurance sales channels in order to ensure the protection of customers.
The Bill will for the first time obligate insurance undertakings to write down the stages of the manufacturing of insurance product and placing it on the insurance market. The Bill will amend the regulation of sales requirements for cases where insurance is offered together with other products or services. The Bill will amend the requirements for the content of the information provided to the customer on insurance.
The Riigikogu concluded the first reading of three other Bills
The Bill on Amendments to the State Budget for 2017 Act (510 SE), initiated by the Government, will adjust the budget expenditure in connection with changed needs. The total volume of the revenue and expenditure will not change as a result of that. The current year’s expenditure of ministries and other authorities will be specified, and such amendments to the state budget for current year have been made every autumn in the same manner. The Government had submitted a total of 54 motions to amend to the Riigikogu. At the expense of the surplus of the co-funding of European funds, three million euro will be directed at the provision of social services, incl. the rehabilitation of children with special needs and elimination of the waiting list for technical aids. From the surplus of the co-funding, a total of 1.4 million euro will also be directed to agencies under the Ministry of Social Affairs, the Ministry of Justice and the Ministry of Rural Affairs for procurement of laboratory devices. In the area of government of the Ministry of Education and Research, 2.4 million euro will be directed to the Government’s education expenditure support fund to local governments for teachers’ salary. Within the area of government of the Ministry of Social Affairs, 100 000 euro will be directed from the medicinal product budget surplus to Põlva Hospital, in order that they could better cooperate with Tartu University Hospital. Also, on account of the surplus of the medicinal product budget, 186 000 euro will go to the emergency medical care service and 14 000 euro for the helicopter field in Kihnu which is necessary to provide the emergency medical care service. A number of other amendments were also made in redirecting the budget money.
The Bill on Amendments to the Securities Market Act and Other Associated Acts (507 SE), initiated by the Government, will transpose the relevant EU directive on markets in financial instruments, the main objective of which is to strengthen investor protection. More investors have become active in the financial markets and are offered an even more complex wide-ranging set of services and instruments.
The Bill provides for the requirements for manufacturing and approval of securities and marketing them to clients. Investment firms will have to develop the corresponding internal rules. The requirements will also be applied to recommending and marketing of structured deposits. The aim of the amendment is to ensure that manufacturing and marketing of securities would be well-considered, with the knowledge of the management of the investment firm, and that clients are offered only investment opportunities that meet their needs and desired objectives.
The rules for execution of orders relating to securities have been amended. Investment firms will continue to have to ensure that they execute client orders on terms that are most favourable to the client. According to the Bill, it will have to be explained to the client how the execution of the orders of retail clients and professional clients differs if it differs. The obligation of investment firm to record and keep telephone conversations and electronic communications with clients will also be provided for.
The explanatory memorandum notes that the current Act does not ensure sufficient transparency for the client regarding the inducements that the investment firm receives or pays in relation to the provision of the service. For example, an investment firm providing the service of portfolio management can accept and retain commission if it acquires units of a certain fund of the client’s portfolio. In the future, an investment firm will have to disclose such inducements to the client before the provision of the service.
The Bill will amend the conditions for the provision of investment advice. The Financial Supervision Authority will be charged with the obligation to establish the requirements for the competence of investment advisors.
Under the Bill on Amendments to the Salaries of Higher State Servants Act and the Prosecutor’s Office Act (513 SE), initiated by the Government, the salary of prosecutors, except for assistant prosecutors, will be provided for by an Act instead of a Regulation of the Government of the Republic.
The explanatory memorandum notes that ensuring a comparable competitiveness of the salaries of judges and prosecutors is important for facilitation of the free movement of labour in the public sector, for ensuring the independence of prosecutors, and for efficient operation of the authority ensuring fast and effective pre-trial investigation as well as high-quality public prosecution. For that, the salaries of prosecutors will have to be provided for in the Salaries of Higher State Servants Act.
The sitting ended at 7.08 p.m.
Video recordings of the sittings of the Riigikogu can be viewed at https://www.youtube.com/riigikogu
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