The Acts passed by the Riigikogu include the coming year’s state budget and the Resolutions on the extension of the time limits for the missions of the Defence Forces.

 The State Budget for 2018 Act (521 SE), initiated by the Government, is based on an economic growth of 3.3 percent and is planned with a 0.25 per cent deficit. According to the Act, the expenditure and investments volume of the budget are 10.580 billion euro and the revenue volume 10.308 billion euro.

The aim of the activities funded from the budget is to support four priorities: to promote the economic growth of Estonia, to increase the population of Estonia, to strengthen security and to increase social welfare and cohesion.

The sustainable growth capability of the economy will be supported with infrastructure investments, for which 56.7 million euro will be invested to establish important infrastructure facilities and to develop the living environment. The establishment of the broadband distribution network in cooperation of the state, local governments and the private sector will continue, and the construction of the first stage of Haapsalu railway will begin.

Road management investments are planned to amount to 227 million euro, including the reconstruction of Kose-Mäo highway section into a four-lane highway, the construction of Tallinn Ring Road into a 2+2-lane road in Jüri-Väo section, the construction of Reidi Road, the renovation of Haabersti intersection and the construction of Väo crossing on Tallinn-Narva highway to increase traffic safety.

Defence spending is projected to amount to 2.11 per cent of GDP in 2018. The two per cent of GDP contributed towards independent defence capability will be complemented by the investments necessary for receiving the NATO allied units and the expenses of the national defence investments programme.

With the health care financing reform, additional funds in the total amount of 300 million euro will be directed to the improvement of the availability of health services over the next five years, including 34 million euro in 2018. The state will begin to pay the health insurance part of the social tax of non-working old-age pensioners which will gradually amount to 13 per cent of the average old-age pension by 2022. The Health Insurance Fund will be in charge of some of the health services that so far were funded from the state budget.

With the reform of basic exemption, the rate of basic exemption for low- and average-salaried employees will raise to 500 euro.

The salary fund of the employees remunerated from the state budget will increase by 2.5 per cent. The areas of government of the ministries will arrange the more specific distribution of the supplementary salary fund between the authorities and posts. The salary fund will grow more – by 4.5 per cent – for internal security employees, including police officers, rescuers, prison employees and customs officials, as well as social welfare workers.

Teachers’ salary rise will also continue; 36 million euro more than in 2017 have been planned for that in the budget of the Ministry of Education and Research. There are 10 million euro in the budget for the salary rise of culture workers and young coaches. 0.6 million euro per year will be added to raise prosecutors’ salaries, in order to ensure competitiveness of the salaries.

Regional investments were increased in the budget, and various third sector and civil society projects were supported by 4 million euro as one-off expenditure. They will be covered by reducing the Government’s targeted reserve to the same extent. The largest allocations include 300 000 euro to the non-profit association Village Movement “Kodukant”, 85 000 euro to the non-profit association Estonian Cancer Society, 85 000 euro to Hille Tänavsuu Cancer Treatment Foundation “The Gift of Life”, 70 000 euro to the Defence League, 40 000 euro to the Estonian Volunteer Rescue Association, 35 000 euro to the Estonian Association of Large Families and 30 000 euro to the non-profit association uniting schools that support beginning teachers. The aim of these proposals is to solve urgent investment or support needs of various localities.

 Representatives of factions who took the floor during the debate gave assessments to the coming year’s state budget and pointed out problems relating to it. Andres Herkel (Estonian Free Party) said that the coming year’s state budget could not be supported, because it had been drafted with a deficit, nor were the tax structure and the excise policy acceptable, and the budget was not sustainable. Kalvi Kõva (Social Democratic Party) stressed that the budget supported the balanced development of the society. Jürgen Ligi (Reform Party) said that the balanced budget had been gambled away in the drafting of that budget. He noted that the state was living beyond its means. Priit Sibul (Pro Patria and Res Publica Union) emphasised the importance of the income tax exemption reform, the defence spending, the funds allocated to education, and family benefits. Mihhail Stalnuhhin (Centre Party) underlined the importance of the income tax reform. Martin Helme (Estonian Conservative People’s Party) said that their faction did not support the coming year’s budget for a number of reasons concerning its content and tax policy. In his words, the budget was full of wasteful expenses.

55 members of the Riigikogu voted in favour of the passage of the Act and 41 were against.

Major amendments introduced by the Act on Amendments to the Vital Statistics Registration Act and Other Associated Acts (511 SE), initiated by the Government, are connected with the registration of births and deaths and the entering of the data of persons who have been granted international protection into the population register.

The Act significantly extends the range of persons who in the future will have the possibility to submit an application for registration of birth in a digitally signed form. If under the current Act only parents who are married to each other can submit an application this way, then under the new rules a majority of parents will have the possibility to submit a digitally signed application, except for parents who are minors and parents with restricted active legal capacity.

The registration of a death will become considerably simpler from 1 July next year. As a general rule, there will be no need to go to a vital statistics office to register a death, because the data concerning a death will be entered into the population register automatically when a health care provider prepares a death certificate. The Act establishes a regulation for entering the data of persons who are granted international protection into the population register, because in most cases such persons do not carry documents certifying vital statistics events when they come to Estonia. The Act enables vital statistics data to be entered into the population register on the basis of a decision on the granting of international protection prepared by the Police and Border Guard Board under which vital statistics events and relationships are established within the framework of proceedings for granting international protection. More lenient requirements are established for the formal requirements for vital statistics documents of persons who have been granted international protection, as persons in need of international protection are not in a position to comply with the requirements set for a foreign document in the current Act.

81 members of the Riigikogu voted in favour of the passage of the Act and 4 were against.

The Act on Amendments to the Bailiffs Act and Amendments to Other Associated Acts (280 SE), initiated by the Government, creates the possibilities to ensure sustainability of the freelance bailiffs system.

81 members of the Riigikogu voted in favour of the passage of the Act, 4 were against, and there was one abstention.

The Act on Amendments to the Tobacco Act (357 SE), initiated by the Government, establishes rules to prevent and reduce the spread of addiction and health damage arising from tobacco products and related products in the society.

The prohibition of the display of tobacco products and related products, and the prohibition of the presentation of trademarks thereof on retail sales premises are enforced. Exemptions remain in place for specialised retail outlets, ships servicing international lines, and shops located in closed territories of airports and ports.

The provisions concerning sales promotion in the current Tobacco Act are extended to products related to tobacco products which must not be offered as a prize in a draw, an award or some other good in the future, nor must they be sold in the same packaging with some other product, such as mobile phone bag or ashtray.

The Act restricts the availability and consumption of e-cigarettes. In the future, the use of e-cigarettes will be prohibited in all places where smoking is prohibited. In addition to the prohibition on cross-border distance sales, there is a prohibition on national distance sales, and therefore tobacco products cannot be ordered from webshops or catalogues in the future.

The Act also establishes requirements for the contents and purity of non-nicotine liquid for electronic cigarettes, and prohibits flavours other than those of tobacco in electronic cigarettes.

The Act provides for an obligation to demand that the client who purchases tobacco or related products present an identity document, except in the case of a person who is obviously an adult. The Tax and Customs Board is given the right to purchases for monitoring compliance to establish sale of illicit tobacco, and police officers are given the right to purchases for monitoring compliance to establish sale of tobacco products or related products to minors, together with the right to involve persons of at least 16 years of age in making purchases for monitoring compliance as necessary.

The Act provides for a transitional period for the prohibition of sales promotion, the prohibition of display and presentation of trademarks, the prohibition of national distance sales, the prohibition on flavourings other than those of tobacco in electronic cigarettes, the prohibition of the sale of products related to tobacco products in the same packaging with other products, and the extension of the labelling requirements for existing packagings also to publications included in packages. The transitional period lasts until 1 July 2019.

Andres Ammas (Estonian Free Party), who took the floor during the debate, said that the Free Party Faction did not support the Act because not everything could be regulated by commands and prohibitions. Jürgen Ligi (Reform Party) said that he had recommended his faction not to vote in favour of the Act. The reasons coincided with the positions set out above.

48 members of the Riigikogu voted in favour of the passage of the Act, 24 were against, and there were 4 abstentions.

The Act on Amendments to the Securities Market Act and Other Associated Acts (507 SE), initiated by the Government, transposes 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 Act provides for the requirements for manufacturing and approval of securities and marketing them to clients. Investment firms have to develop the corresponding internal rules. The requirements are also 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 continue to have to ensure that they execute client orders on terms that are most favourable to the client. According to the Act, it has 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 firms to record and keep telephone conversations and electronic communications with clients is also 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 Act amends the conditions for the provision of investment advice. The Financial Supervision Authority is charged with the obligation to establish the requirements for the competence of investment advisors.

84 members of the Riigikogu voted in favour of the passage of the Act and 6 were against.

The Act on Amendments to the Sport Act and the Income Tax Act (534 SE), initiated by the Government, provides for the possibility to pay a compensation for expenses to referees which is granted to a sports organisation or the owner of a sports school entered into the sports database. The payment of the compensation for expenses has to be connected with a referee acting as a volunteer at competitions reflected in the calendar plan of a sports federation or a county sports union or a sports association operating on a regional principle. The estimated rate of the compensation for expenses is up to 20 euro per day of refereeing. To receive a compensation for expenses, the person has to be evaluated by a sports federation or be under 20 years of age, and the person may not receive wages or remuneration paid on the basis of a contract under the law of obligations for refereeing at the same competition.

Toomas Jürgenstein (Social Democratic Party), who took the floor during the debate, considered it important that the problem of the remuneration of referees be solved. Jürgen Ligi (Reform Party) said that he would vote against the Act.

He justified his opposition by saying that that was an exception that would open the door for making further exceptions.

65 members of the Riigikogu voted in favour of the passage of the Act, 7 were against, and there were 7 abstentions.

Under the Act on Amendments to the Social Tax Act and the Income Tax Act (499 SE), initiated by the Government, sole proprietors will have a tax environment similar to that of companies, which will make it more favourable compared to the current environment and extend on sole proprietors the tax incentives and social guarantees established for employees. A pensioner may submit an application concerning the basic exemption to both entities that withhold income tax if the person receives a pension and a remuneration both of which amount to less than 500 euro.

Sole proprietors have to pay social tax on business income earned, and both a minimum and a maximum limit have been established for the payment thereof. The Act reduces the maximum limit for social tax for sole proprietors so that it is not fifteen, but ten times the sum of the minimum monthly wage for the taxable period annually. This year, the maximum limit is 27.918 euro; with the amendment, this amount will decrease to 18.612 euro. A sole proprietor is given the possibility to reduce his or her minimum social tax obligation by the days when he or she was temporarily incapacitated for work in the event of sickness. In addition, a sole proprietor will be entitled to calculate for himself or herself a rated sickness benefit for the second until the eighth day of sick leave and to deduct it from the business income subject to social tax.

Sole proprietors who engage in studies as their main duty are released from the minimum social tax obligation and the payment of advance payments of social tax. As a result of an amendment, they will no longer have the obligation to meet the minimum social tax obligation, and when earning business income, they will have to pay social tax only on income actually earned. A sole proprietor will have the possibility to deduct from business income the expenses made for improving his or her health to the extent of up to 100 euro in a quarter. Similarly to companies, sole proprietors are allowed to deduct from income up to 10-euro expenses on advertising gifts, and their catering costs incurred upon engagement in business to the extent of the daily allowances during assignments abroad (50 euro for the first 15 days of an assignment abroad and 32 euro for each following day). Expenses incurred in entertaining guests and business partners can also be deducted to the extent of 32 euro per month.

Also, an amendment that concerns in particular low-income pensioners was introduced into the Act. If a person receives a pension and a remuneration both of which amount to less than 500 euro, he or she may submit an application concerning the basic exemption to both entities that withhold income tax. When doing so, it must be kept in mind that the basic exemption indicated on the applications to the employer and the Social Insurance Board may not exceed 500 euro in total.

Pensioners who have not worked in the previous year will not have to take any action; the Social Insurance Board will apply the basic exemption on the pensions paid to them automatically without an application. An important amendment is that, as of the new year, 11.86 per cent of the taxable income of a resident natural person, instead of the current 11.60 per cent, will be received by the local government of the taxpayer’s residence.

Mihhail Stalnuhhin (Centre Party) took the floor during the debate and stressed the importance of the amendments made to the Act.

81 members of the Riigikogu voted in favour of the passage of the Act and there were 2 abstentions.

The Riigikogu passed the Resolutions extending the time limits for the missions of the Defence Forces

The Resolution of the Riigikogu “Extension of the Time Limit for the Use of the Defence Forces in the Fulfilment of the International Commitments of the Estonian State in the Training and Capability Building Programme for Iraq, Led by the North Atlantic Treaty Organization” (538 OE), submitted by the Government.

The Resolution provides for the extension of the time limit for the use of up to five active servicemen in the composition of the Training and Capability Building Programme for Iraq, led by the North Atlantic Treaty Organization, until 31 December 2018, as of 1 January.

78 members of the Riigikogu voted in favour of the passage of the Resolution.

The Resolution of the Riigikogu “Use of the Defence Forces in the Fulfilment of the International Commitments of the Estonian State in the Composition of the United Kingdom’s Joint Expeditionary Force” (540 OE), submitted by the Government.

The Resolution provides for the use of up to 20 active servicemen of the Defence Forces, as necessary, from 1 January to 31 December 2018 in the composition of the United Kingdom’s Joint Expeditionary Force in a military operation organised for the purpose of maintaining or restoring peace and security on the basis of Chapters VI and VII of the Charter of the United Nations, or in any other military operation in compliance with generally recognised practices and principles of international law.

70 members of the Riigikogu voted in favour of the passage of the Resolution.

The Resolution of the Riigikogu “Extension of the Time Limit for the Use of the Defence Forces in the Fulfilment of the International Commitments of the Estonian State in the Peacekeeping Mission in Kosovo” (541 OE), submitted by the Government.

The Resolution provides for the extension of the time limit for the use of up to three active servicemen of the Defence Forces in the membership of the North Atlantic Treaty Organization-led Kosovo peacekeeping force KFOR (Kosovo Force) until 31 December 2018, as of 1 January.

61 members of the Riigikogu voted in favour of the passage of the Resolution.

The Resolution of the Riigikogu “Extension of the Time Limit for the Use of the Defence Forces in the Fulfilment of the International Commitments of the Estonian State in the UN Peacekeeping Mission in Lebanon” (547 OE), submitted by the Government.

The Resolution provides for the extension of the time limit for the use of up to 50 active servicemen of the Defence Forces in the composition of the United Nations-led international peacekeeping mission UNIFIL (United Nations Interim Force in Lebanon) in Lebanon until 31 December 2018, as of 1 January.

61 members of the Riigikogu voted in favour of the passage of the Resolution.

The Resolution of the Riigikogu “Extension of the Time Limit for the Use of the Defence Forces in the Fulfilment of the International Commitments of the Estonian State in the Post-Conflict Peacekeeping Mission in Lebanon, Israel, Egypt and Syria” (548 OE), submitted by the Government.

The Resolution provides for the extension of the time limit for the use of up to six active servicemen of the Defence Forces in the United Nations-led peacekeeping mission UNTSO (United Nations Truce Supervision Organization) in Lebanon, Israel, Egypt and Syria until 31 December 2018, as of 1 January.

59 members of the Riigikogu voted in favour of the passage of the Resolution.

The Resolution of the Riigikogu “Use of the Defence Forces in the Fulfilment of the International Commitments of the Estonian State in Another International Military Operation, Led by the North Atlantic Treaty Organization or its Member State, the European Union or the United Nations, upon the First Contribution thereto” (539 OE), submitted by the Government.

The Resolution provides for the use of up to 50 active servicemen of the Defence Forces, as necessary, from 1 January to 31 December 2018 in a military operation organised for the purpose of maintaining or restoring peace and security on the basis of the provisions of Chapters VI and VII of the Charter of the United Nations, led by the North Atlantic Treaty Organization or its member state, the European Union or the United Nations, or in any other military operation in compliance with generally recognised principles and provisions of international law, upon the first contribution thereto.

51 members of the Riigikogu voted in favour of the passage of the Resolution and 6 were against.

The Resolution of the Riigikogu “Extension of the Time Limit for the Use of the Defence Forces in the Fulfilment of the International Commitments of the Estonian State in the European Union Military Mission EUNAVFOR Med/Sophia” (545 OE), submitted by the Government.

The Resolution provides for the extension of the time limit for the use of up to six active servicemen of the Defence Forces in the composition of the European Union-led military mission EUNAVFOR Med/Sophia until 31 December 2018, as of 1 January.

50 members of the Riigikogu voted in favour of the passage of the Resolution and 4 were against.

The Resolution of the Riigikogu “Use of the Defence Forces in the Fulfilment of the International Commitments of the Estonian State in the Composition of the North Atlantic Treaty Organization Response Force” (542 OE), submitted by the Government.

The Resolution provides for the use of up to 200 active servicemen of the Defence Forces, as necessary, from 1 January to 31 December 2018 in the composition of the NATO Response Force NRF in a military operation organised for the purpose of maintaining or restoring peace and security on the basis of Chapters VI and VII of the Charter of the United Nations, or in any other military operation in compliance with generally recognised practices and principles of international law.

54 members of the Riigikogu voted in favour of the passage of the Resolution.

The Resolution of the Riigikogu “Extension of the Time Limit for the Use of the Defence Forces in the Fulfilment of the International Commitments of the Estonian State in the International Military Operation “Inherent Resolve”” (544 OE), submitted by the Government.

The Resolution provides for the extension of the time limit for the use of up to ten active servicemen of the Defence Forces in the United States-led International Military Operation “Inherent Resolve” until 31 December 2018.

53 members of the Riigikogu voted in favour of the passage of the Resolution.

The Resolution of the Riigikogu “Extension of the Time Limit for the Use of the Defence Forces in the Fulfilment of the International Commitments of the Estonian State in the European Union Training Mission and the UN Peacekeeping Mission in Mali” (546 OE), submitted by the Government.

The Resolution provides for the extension of the time limit for the use of up to ten active servicemen of the Defence Forces in the European Union Training Mission EUTM Mali (European Union Training Mission in Mali) until 31 December 2018, as of 1 January. The Resolution also extends the time limit for the use of up to ten active servicemen of the Defence Forces in Mali in the United Nations peacekeeping mission MINUSMA (United Nations Multidimensional Integrated Stabilization Mission in Mali) until 31 December 2018, as of 1 January.

49 members of the Riigikogu voted in favour of the passage of the Resolution.

The Resolution of the Riigikogu “Extension of the Time Limit for the Use of the Defence Forces in the Fulfilment of the International Commitments of the Estonian State in the Training and Advisory Mission in Afghanistan” (543 OE), submitted by the Government.

The Resolution provides for the extension of the time limit for the use of up to six active servicemen of the Defence Forces in the composition of the North Atlantic Treaty Organization-led training and advisory mission RSM (Resolute Support Mission) in Afghanistan until 31 December 2018, as of 1 January.

48 members of the Riigikogu voted in favour of the passage of the Resolution and one was against.

 The Riigikogu concluded the second reading

The Bill on Amendments to the Land Cadastre Act, the Earth’s Crust Act and the Spatial Data Act (533 SE), initiated by the Government.

The Bill will amend legislation in order that the Estonian Land Board could transfer the relevant functions related to the field of information and communications technology (ICT) to the Information Technology Centre of the Ministry of the Environment (KEMIT). The Land Board is charged with the functions relating to the maintenance of information systems and registers. According to the Bill, the authorised processor of information systems relating to the consolidation of the ICT field of the Land Board will be appointed by a Regulation. In such a case there will be no need to amend the Act in the future in a situation where a change of the authorised processor is necessary. The amendments provided for in the Bill will raise the efficiency of ICT administration and development and the security of information systems within the area of government of the Ministry of the Environment. The content services of the Land Board are based on information technology to the extent of 90 per cent. The explanatory memorandum notes that the distribution of responsibility is very important in the maintenance of the main national registers. In order that the functioning and development of information systems of national importance would be ensured, and no legal unclarity would arise in the distribution of official duties and the responsibility between the Land Board and the Information Technology Centre of the Ministry of the Environment, the competence of each authority in the maintenance of information systems needs to be provided as precisely as possible. The consolidation of ICT services under one authority of the area of government, whose function is to develop and administer the information systems of the authorities of the whole area of government of the ministry, will help reduce duplication and the resulting inefficiency in the provision of services.

The Riigikogu concluded the first reading of three Bills

The Bill on Amendments to the Aviation Act and the State Fees Act (532 SE), initiated by the Government, will bring the relevant Chapter of the Aviation Act into conformity with the EU Regulation that regulates both commercial and non-commercial air operations. Up to now, only commercial air transport has been regulated at the EU level. In the amendment of the Aviation Act, account has also been taken of the need to bring the Aviation Act into conformity with the relevant EU Regulation that regulates the issues relating to the qualifications and licences of aviation personnel.

The Bill on Amendments to the Liquid Fuel Act and Amendments to Other Associated Acts (536 SE), initiated by the Government, will amend the Liquid Fuel Act, and in connection with that, the Alcohol, Tobacco, Fuel and Electricity Excise Duty Act and the Taxation Act. The aim of the Bill is to reduce tax evasions, to promote electronic records management, to reduce the circulation of low-quality fuel and to improve the competition conditions in the fuel sector. The Bill will improve the electronic records management between the Tax and Customs Board, fuel sellers and warehouse keepers. The Bill will create a legal basis for the establishment of the fuel handling system. It was pointed out at the sitting that that would enable the data of the sales transactions concerning liquid fuel released for consumption to be administered in real time, and the supervision of the handling of fuel to be merged into an electronic environment. This way, an overview of the movement of fuel through different purchase and sale chains will be ensured, and sellers of fuel will no longer need to submit reports concerning liquid fuel to the Tax and Customs Board. At the same time, a legal basis for the establishment of the storage accounts and reporting database will be created. The aim of the database is to make the data of warehouse operations involving fuel available in real time to the Tax and Customs Board. This will enable the Board to exercise more operational and efficient supervision over the movement of goods both in single warehouses and across warehouses. The Bill provides for a restriction according to which, as a general rule, fuel can be sold in a quantity that is covered by a security. This will preclude a situation where a seller of fuel could cause unlimited VAT damage to the state. A seller of fuel will retain the entitlement to request reduction of the security presented to the extent of up to 90 per cent of the amount of the security if the seller has operated under an authorisation for the sale of fuel for at least half a year, and the seller and the members of the seller’s management or controlling body have no tax arrears.

The Bill on Amendments to the Alcohol, Tobacco, Fuel and Electricity Excise Duty Act and Other Acts (559 SE), initiated by the Estonian Centre Party Faction, the Pro Patria and Res Publica Union Faction and the Social Democratic Party Faction.

The Bill will reduce by half the excise duty rise planned for 2018 for beer, other alcohol, and wine and fermented beverages with an ethanol content of up to 6 per cent by volume. The rises in alcohol excise duty for 2019 and 2020 will be preserved to the same extent, which is 10 per cent, and 20 per cent in the case of wine and fermented beverages with an ethanol content exceeding of 6 per cent by volume.

Andres Ammas (Estonian Free Party), who took the floor during the debate, considered the Bill unsuitable and deficient. Mihhail Stalnuhhin (Centre Party) considered it necessary to support the proposals set out in the Bill. Jürgen Ligi (Reform Party) stressed that the excise duty rise is proposed by the Government had brought about a rise in the business at the border. Henn Põlluaas (Estonian Conservative People’s Party) said that the Bill did not propose a lowering of the excise duty, but a rise.

The sitting ended at 6.09 p.m.

Verbatim record of the sitting (in Estonian):

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

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Riigikogu Press Service
Gunnar Paal,
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