At the extraordinary sitting, the Riigikogu expressed confidence in the Government by approving the amendments to Acts relating to pensions.
The Act on Amendments to the Funded Pensions Act and the State Pension Insurance Act and Amendments to Other Associated Acts and the Income Tax Act (685 SE), initiated by the Government, raises the basic exemption rate of pensions from the current 210 euro to 220 euro per month, or from 2520 euro to 2640 euro per year, and the average old-age pension will continue to be exempt from income tax. The calculation of the additional pension supplement to the parent, the spouse of the parent, the guardian or the home carer of a child was also changed with the Act. Pursuant to the Act that was in force earlier, an additional pension supplement, in the amount of the value of one year of pensionable service, for raising a child born before 2013 would have been added to the pension of one parent, the spouse of the parent, the guardian or the home carer from 1 January 2015. The new Act provides the payment of this additional pension supplement from 1 January 2018.
“These decisions, first of all this postponement, should be seen as a whole together with the increasing of child benefits, which was recently approved here at the Riigikogu without the source for covering it, and which will cost around 73 million euro to the state budget,” said the Minister of Finance Jürgen Ligi, who presented the Bill on behalf of the Government. “And also taking into account the compensation of the freezing of the second pillar of pension during the crisis, which has been decided earlier. That expense will amount to 54 million next year and it will increase to 60 million euro by 2017. And also together with the general increase of the basic exemption rate from 144 to 154 euro per month.”
16 members of the Riigikogu asked questions of the Minister of Finance.
Aivar Kokk, Andrus Saare, Urmas Reinsalu, Toomas Tõniste, Siim Kiisler, Marko Pomerants, Helir-Valdor Seeder, Priit Sibul and Karel Rüütli took the floor during the debate.
The members of the Pro Patria and Res Publica Union Faction were against postponement of the additional pension supplement. “Postponement, cutting of parental pension will concern 226,000 pensioners,” Toomas Tõniste remarked. “An average retired parent with two children will lose 120 euro per year, 360 euro in three years; altogether it makes nearly 86 million euro.”
Siim Kiisler added that the amendment will be especially painful for families with many children. “It is not perceived at all what is the situation of those mothers who have repeatedly, for a long time been away from the labour market, what this has meant for their careers, what impact it has on their monthly salary that they have constantly been away from the labour market,” he said. “Each time when they return, they essentially have to start from zero and rebuild their career, and try to increase their salaries in order to also, in the end, get a better pension. These people are today told that their pension should be smaller.”
The Chairman of the Social Democratic Party Faction Karel Rüütli said that the pensioner whose child was born before 1 January 2013 at the moment gets a monthly pension supplement of around 10 euro per each child. “This agreement, this 10 euro, will not be taken away and it will remain in force,” he said. “From 1 January, it was to increase to 15 euro per child in a month. It was recommended by the Government to postpone the payment of the additional 5 euro to 2018. Until 2018, the state will make additional payments to second pillar of pensions to compensate the temporary discontinuation, then this obligation will end, or the need to cover the deficit caused by the pension reform will decrease.”
As the Government had decided on 28 June to bind the passage of the Bill to the issue of confidence, the 1000 motions to amend, submitted by the Pro Patria and Res Publica Union Faction, were not voted at the sitting. A vote of confidence in the Government was held together with the passing of the Act. 56 members of the Riigikogu voted in favour of the Act and 30 members of the Riigikogu against it.
The Riigikogu concluded the second reading of five Bills:
The Bill on Amendments to the Alcohol, Tobacco, Fuel and Electricity Excise Duty Act and the Fiscal Marking of Liquid Fuel Act (682 SE), initiated by the Government, will raise excise duty rates of alcohol, tobacco products and natural gas, and establish an excise duty exemption on biogas. Pursuant to the Bill, the excise duty rate on alcohol will increase by 15 percent in 2015, and by 10 percent in 2016, 2017 and 2018. The excise duty rate of cigarettes and smoking tobacco will be increased by 5% per year from 2016 to 2018. According to the proposal of the Finance Committee, the price-based component of excise will be lowered in the structure of cigarette excise and the item-based component will be correspondingly increased, as the result of which cheaper cigarettes will become relatively more expensive and thus less affordable. The excise duty rate for natural gas will be increased by 20% in 2015, 2016 and 2017.
The Bill also provides the creation of the tax liability of electricity producers with a capacity below 100 kW who are connected to the system (residential customers and apartment associations), and allows for fuel to be used as heating fuel in the fuel production process without paying excise duty. The major amendments to the Fiscal Marking of Liquid Fuel Act are the following: the right to use the liquid fuel marked with a fiscal marker in the carriage of passengers and goods by rail, in shipping traffic (except in commercial fishing), and for the production of heat and electric power is repealed. According to the Bill, light heating oil will no longer be subject to fiscal marking and this means that, when the Act enters into force, only one fuel will be marked with a fiscal marking – diesel fuel for specific purposes As light heating oil will no longer be subject to fiscal marking, the excise duty rate for light heating oil will be raised to the same level as the excise duty rate for diesel fuel. Originally the Bill also prescribed to end the use of excise duty exemption of fuel in fishing, but the Finance Committee made a motion to amend, according to which the excise duty exemption of diesel fuel for specific purposes was preserved in fishing.
Aivar Riisalu, Jaak Aaviksoo, Helir-Valdor Seeder, Kadri Simson, Tarmo Tamm and Ken-Marti Vaher took the floor during the debate.
The Pro Patria and Res Publica Union Faction and the Centre Party Faction moved to suspend the reading of the Bill. 31 members of the Riigikogu voted in favour of the motion and 55 members of the Riigikogu against it.
The amendments proposed in the Bill on Amendments to the Value Added Tax Act (644 SE) restrict the deductibility of the VAT paid upon purchase of automobiles and use of automobiles under contract for use (including upon rental and lease), and upon purchasing goods and services related to them (motor fuel, repair, maintenance, etc.), instead of the taxation of self-supply of automobiles, with the aim of fairer taxation of the use of automobiles which will at the same time increase state budget receipts.
Aivar Riisalu, Peeter Laurson, Aivar Kokk and Urmas Reinsalu took the floor during the debate.
The Centre Party Faction and the Pro Patria and Res Publica Union Faction moved to suspend the reading of the Bill. 32 members of the Riigikogu voted in favour of the motion and 54members of the Riigikogu against it.
The Bill on Amendments to the Taxation Act and the Value Added Tax Act (680 SE), initiated by the Government, reduces the administrative burden of the Tax and Customs Board, and the financial risk of the state relating to the verification of claims for refund. In the Taxation Act, the initial deadline for the verification of claims for refund is extended from the current 30 calendar days to 60 calendar days. A possible longer period for verification will apply to all claims for refund, including the refunding of overpaid amounts of value added tax. The maximum period for the verification of the claims for refund of overpaid VAT amounts will be shortened so that the total length of the period (120 calendar days in total together with the initial deadline) will remain the same. The bases for the risk analysis of the Tax and Customs Board upon the verification of claims for refund will not be changed. After the implementation of the amendments, a tax authority will continue the practice of fulfilling 95% of claims for refund of overpaid VAT amounts within up to four working days. The amendment concerns in particular the undertakings who submit claims for refund that need further inspection. If a claim for refund is fulfilled within 60 calendar days, interest will not be calculated for the benefit of the taxable person. According to the Bill, the Tax and Customs Board will publish on its website the amounts of state taxes, funded pension contributions and unemployment insurance premiums paid by taxable persons (except natural persons), and separately also the amount of taxes on labour force. The Bill provides that, in general, the tax auditor need not prepare an audit report if no facts altering the tax liability are discovered as a result of the tax audit. A tax authority will prepare an audit report at the request of a taxable person. According to the Bill, as of the opening of a succession, interest will not be calculated on tax arrears relating to the estate. The calculation of interest is terminated on the day of the death of the bequeather.
The Bill on Amendments to the Income Tax Act, the Social Tax Act and the Cultural Endowment of Estonia Act (683 SE), initiated by the Government, specifies the principles and procedure for drawing up the list of non-profit associations, foundations and religious associations benefiting from income tax incentives. It also resolves some issues and problems that have arisen in the implementation of the Income Tax Act. Certain amendments are necessary in connection with new formats of tax return that are planned to be established as of 2015. The Bill increases the rate of basic exemption, defines the concept of grant, and specifies when, to whom and in which amount a grant may be awarded. The Cultural Endowment of Estonia Act is also amended with a view to ensuring that grants awarded by the Cultural Endowment are exempt from income tax. In addition, the Bill provides for the power of the supervisory board of the Cultural Endowment to approve the bases for the payment of the awards and grants awarded by the Cultural Endowment.
Aivar Riisalu and Helir-Valdor Seeder took the floor during the debate.
The Centre Party Faction and the Pro Patria and Res Publica Union Faction moved to suspend the reading of the Bill. 29 members of the Riigikogu were in favour of the motion, 53 against it.
The Bill on Amendments to the Electricity Market Act (687 SE), initiated by the Economic Affairs Committee, clarifies the financing of the digital data exchange platform and the database of certificates of origin for electricity, to be implemented in the electricity market. Through the data exchange platform, data exchange will take place in the electricity market, allowing for the changing of an open supplier, forwarding of metering data, and fulfilment of the obligations imposed on market participants by law, and ensuring the rights granted to them. The guarantee of origin of electricity and the database for the administration of the guarantees were established with the transposition of the Renewable Energy Directive (2009/28/EC). It established the obligation of transmission system operators to issue a guarantee of origin for electricity produced from renewable energy sources. In order to join the trading system which allows for international transactions, the requirements for the acts performed with the guarantees of origin need to be specified in the Electricity Market Act. The amendments regarding the guarantees of origin will also enable transmission system operators to join the international trading system.
At the beginning of the sitting, the member of the Riigikogu Mihhail Korb took the oath of office.
The verbatim record of the sitting (in Estonian): https://www.riigikogu.ee/?op=steno&stcommand=stenogramm&day=30&date=1404115080
Photos of taking the oath: http://fotoalbum.riigikogu.ee/v/2014/Riigikogu/30062014/
The Riigikogu Press Service
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