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The Riigikogu approved next year’s state budget

Under the State Budget for 2021 Act (254 SE) initiated by the Government, next year, the expenditure and investments volume of the budget will be 13.1 billion euro and the revenue volume 11.2 billion euro. Compared to the initial budget for 2020, revenue will grow by 5 per cent, that is, by 534 million euro and, taking into account the amendments made by the supplementary budget, by 12 per cent, that is, by 1.2 billion euro. Expenditure and investments will grow by around one billion euro compared to the initial budget for 2020 and by 5 per cent, that is, by around 0.6 billion euro, taking into account the amendments made by the supplementary budget.

The volume of government sector investments will amount to approximately 1.9 billion euro in 2021.

Tax revenue will increase to 9.3 billion euro next year compared to the approximately 9 billion euro this year. Tax burden will fall to 32.7 per cent of GDP next year compared to the 33.8 per cent in 2020.

Around 1.4 billion euro of EU support is planned in the state budget for 2021.

Next year, the government sector budget is projected at a nominal deficit of 6.7 per cent of GDP and a structural deficit of 6.6 per cent of GDP. According to plans, the government sector structural budget deficit will decrease to 4.9 per cent of GDP and the nominal deficit to 5.4 per cent of GDP in 2022. The structural deficit will decrease to 3.3 per cent of GDP and the nominal deficit to 4.3 per cent of GDP in 2023, and the structural deficit will decrease to 1.3 per cent of GDP and the nominal deficit to 2.5 per cent of GDP in 2024.

Chairman of the Finance Committee Aivar Kokk said that, according to the amendments made during the third reading, in next year’s state budget, 2.5 million euro would be allocated from the Government’s reserve fund to pay sickness benefit from the second day of sick leave. This will supplement the 2.5 million euro planned from the budget of the Estonian Health Insurance Fund. Thus, a total of 5 million euro is planned for the payment of sickness benefits from next year’s budget. It is a temporary measure for the period from 1 January to 30 April. At the same time, 225,000 euro were allocated to subsidise the induction year of school psychologists in order to contribute to the resolution of the health problems of young people that have become highly topical.

The budget allocated 6.7 million euro for regional investments, for supports to third sector and civil society projects on the basis of the proposals made by the factions, 668 in total. Additional funds were allocated to voluntary organisations, local communities, nurseries, schools, children’s hobby activities, women’s associations, parishes and sports organisations.

The state budget for 2021 has four main overarching objectives: to help people stay healthy by contributing to healthcare, to help those who need help most through social protection, to speed up the smart development with the help of research, and to continue investments into the future with the green and digital transition.

The representatives of factions took the floor during the debate. They presented their positions on next year’s state budget.

In Maris Lauri’s (Reform Party) opinion, it is a bad and irresponsible budget because it fails to address the issues it should. She disapproved the large deficit in the budget. Lauri referred to the fact that the loan money would be used to cover current expenses. In her words, the Government has distributed tax and loan money to its own people, totally irrelevant issues are addressed, there are just hollow-sounding words, problems are not solved, more problems are created, the achievements of many years are destroyed and financial difficulties for the future are created. Therefore it is a very bad budget. “This budget does not deserve support. It should be rejected and replaced by a better one,” Lauri said.

Kersti Sarapuu (Centre Party) said that there was a lot of uncertainty in connection with the corona crisis, which had also left an imprint on the budget. In her opinion, a number of necessary allocations have been made in the budget and she listed them. Sarapuu noted that, with the help of the supports, Estonia would be able to exit the crisis more quickly and the additional funding was intended to support long-term changes and innovations in Estonian economy. “I venture to say that Estonia has the best budget in Europe and I call on members of the parliament to vote in favour of it accordingly,” Sarapuu said.

Indrek Saar (Social Democratic Party) discussed the resolution of the problems that had emerged in connection with the corona crisis and the consequent allocation of benefits to the deprived. In his opinion, the proportions are not in balance in the budget. Several important issues have been overlooked. In conclusion, he asked what message that budget was sending to society amidst an acute health crisis. “Unfortunately, this message is two million euro for a referendum that is needed simply to satisfy the ambitions of one political party and that is being planned at the expense of the rest of the whole society, and 171,000 for generous funding of an anti-abortion non-profit organisation. As if these were the most pressing issues at present. Sad, very sad. And this is why Social Democrats will vote against this budget,” Saar said.

Mart Helme (Estonian Conservative People’s Party) said that that budget was different to the ones that had been habitually drawn up over the years. In his opinion, the budget was indeed looking into the future. This budget is not based on dogmas but looks at people’s needs. Helme categorically rejected the allegations made by opposition members. In his opinion, the Government has made difficult decisions to the best of its judgment. “Of course, Estonia as a country will never be completed. Of course, these budget funds will not be sufficient to fix all problems. However, we are trying, we are doing what we can, we are doing what we are able to do, we are doing what we consider the most important at the given moment of time within the framework of the given funds. And I think that all this does not deserve grumbling criticism but rather thinking along and contributing ideas, both from the opposition and the coalition,” Helme said.

Aivar Kokk (Isamaa) thinks that, every time the state budget is debated, the opposition always criticises it and the coalition welcomes it. The state budget has been drawn up in view of the situation in the fight against the coronavirus. He pointed out the investments in health care and defence spending. Kokk said that a pension rise had also been planned. He also mentioned the decrease in tax burden next year. In Kokk’s opinion, the Riigikogu had acted quickly and decisively this year. “This budget reflects the priorities of Isamaa and of the coalition, and Isamaa supports it,” Kokk said.

55 member of the Riigikogu voted in favour of passing the State Budget for 2021 Act (254 SE), initiated by the Government. 44 were against.

The Act on Amendments to the Local Government Financial Management Act (282 SE), initiated by the Finance Committee, will enable local governments to increase their net debt burden. This is necessary in order that, in the emergency situation due to the spread of COVID-19 and in the period following it, local governments could take larger loans as necessary to stimulate economy and make necessary investments in the circumstances of a slowdown of revenue growth in 2020–2027.

In ordinary circumstances, the upper limit for net debt burden for each local government is a sixfold value of its operating result or 60 per cent of its operating revenue. At present, the upper limit for net debt burden has been set at the tenfold value of operating result or 80 per cent of operating revenue as an exceptional case for 2020 and 2021. The Act extends the exemption for the upper limit for net debt burden until the end of 2024. From then on, the upper limit will gradually decrease in 2025–2028.

The Act also amends the Maritime Safety Act to implement a reduction of waterway due. The amendment is due to the need to support the continuation of international maritime transport through Estonian ports and to motivate consignors to direct their trade flows through Estonian ports.

92 members of the Riigikogu voted in favour of passing the Act.

The Act on Amendments to the Notaries Act and Other Acts (200 SE), initiated by the Government, amends the procedure for the assumption of the office of notary. In the future, a person to fill an office of a notary will always need to pass an examination, and he or she will no longer be able to run as a candidate on the basis of the result of an examination taken previously. The amendments also amend the Notaries Act by including an obligation of refresher training for notaries, notary candidates and substitute notaries.

As an important amendment, the maximum rates of fines provided for notaries and bailiffs for disciplinary offences are harmonised with the rates of the fines imposed on lawyers and patent attorneys. The upper limit of a fine is raised from 6,400 euro to 16,000 euro.

The Act extends the conditions under which an assistant bailiff may substitute a bailiff. At the same time, the Ministry of Justice is given the central role in the administration and development of the information system of state legal aid. When the amendments enter into force, in the future, the Minister of Justice will establish the statutes of the information system of state legal aid.

94 members of the Riigikogu voted in favour of passing the Act.

The Act on Amendments to the Occupational Health and Safety Act and Other Acts (257 SE), initiated by the Government, defines at the level of Act the aim of the working environment database, the data collected and the retention periods of data on the basis of the Personal Data Protection Act. The Act provides for a new requirement for the employer to draw up a risk assessment of the working environment in the working environment database or to forward the risk analysis to the Labour Inspectorate in a format which can be reproduced in writing.

The purpose of the Act is to facilitate the creation of a safe working environment and to reduce the administrative burden for employers in complying with occupational health and safety requirements. For this, the working environment database will be developed, facilitating the communication of agencies and businesses with the state and offering new services. The Act increases the extent of the liability of the employer and the employee in the working environment.

The Act is intended to reduce employees’ own liability when they fall ill and to reduce the risk of people going to work when ill and thereby the spread of the COVID-19 disease over four months starting from January. According to the Act, upon compensation for the days of sick leave, employees’ own liability will decrease to one day instead of the current three days, and the employer will begin to pay for four days instead of five.

During the debate, Riina Sikkut (Social Democratic Party), Tõnis Mölder (Centre Party) and Priit Sibul (Isamaa) took the floor.

93 members of the Riigikogu voted in favour of passing the Act.

The Act on Amendments to the Act on the Ratification of the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (286 SE), initiated by the Government, corrects technical errors in the Act. The amendment bring the Estonian text of the ratification Act into conformity with the original English text of the notifications and reservations.

The Act amends the data on the agreement with Belarus in the table of the agreements for the avoidance of double taxation in respect of which Estonia wishes to apply the convention. Under another amendment, the Act is amended by including a notification according to which Estonia will begin to apply the convention in respect of the taxes covered by tax treaties from the beginning of a calendar year.

The convention was ratified in the Riigikogu on 4 December 2019 but it has not yet entered into force for Estonia. After the entry into force of the amendments, Estonia will be able to submit its instrument of ratification to the depositary of the convention and the convention will be able to enter into force for Estonia. The Convention will enter into force for Estonia on the first day of the month following the expiration of three months after the date of the deposit of its instrument of ratification.

82 members of the Riigikogu voted in favour of passing the Act.

The Act on the Ratification of the Council of Europe Convention on Cinematographic Co-production (revised) (258 SE), initiated by the Government.

The Convention aims to foster international cinematographic co-operation in Europe. As a result of the Convention, it will be possible for Estonian cinematographic producers to join international co-productions more easily, thereby expanding the creative and financing opportunities to make film projects.

The Convention applies to co-operation films, for example, cinematographic works of fiction, animation and documentaries that are intended to be shown in cinemas and, as a general rule, involve at least three producers from three member states. The accession to the Convention is important to Estonia for participation in co-productions where the contribution of a producer remains below 10 per cent of the production costs of the film but is not less than 5 per cent. Compared to the Convention of 1992, the minimum necessary financial contribution of a minority co-producer has been reduced and this opens the possibility in particular for small countries to participate in more co-productions.

Co-production is of significant importance in the making of Estonian films with a higher than average budget because it is impossible to produce such films with Estonian funding only.

71 members of the Riigikogu voted in favour of passing the Act.

The Riigikogu concluded the second reading of six Bills

The Bill on the Repeal of the Trading Act and Amendments to Other Acts arising therefrom (235 SE), initiated by the Government, will update, organise and simplify the legal regulation of the trade sector in order to thereby reduce over-regulation, duplication and the volume of legal regulation as well as administrative burden.

The Bill will repeal the Trading Act and will amend the Acts that have a connection with it. The Trading Act no longer gives added value in regulating the activities of the undertakings operating in the trade sector, including in ensuring conformity of products and services or in relations with the consumer, but it duplicates the rules that have been established for economic activities under other Acts.

The Bill will set no new restrictions on engaging in business in the trade sector. The legal framework necessary to exercise the freedom of enterprise will remain in place.

The purpose of the Bill on Amendments to the Code of Civil Procedure (securing of action based on infringement of intellectual property rights) (231 SE), initiated by the Government, is to enable faster and more effective protection in cases of alleged infringement of copyright, rights related to copyright and industrial property rights. For this, the Bill provides for a possibility in such cases, in order to secure an action, to apply for a court to obligate the intermediary whose services are used in the infringement of rights to take measures to stop or prevent the infringement.

In the event of an infringement of intellectual property rights that consists of making certain content available on the Internet, the amendments made by the Bill will enable to require the intermediary for example to take the content down temporarily or to prevent access to it for the time of judicial proceedings. In particular, in the case of infringements occurring on the Internet, the intermediary is often in the best position to stop the infringement quickly and efficiently.

The obligation to enable rightholders also to apply for a court to issue provisional and precautionary precepts in respect of intermediaries in the event of an infringement of intellectual property rights arises from European Parliament and Council directives.

The Bill on Amendments to the Bankruptcy Act and Other Acts (195 SE), initiated by the Government, will increase the efficiency of bankruptcy proceedings and thereby improve the functioning of the business environment. Among other things, the Bill will provide for the establishment of an insolvency service, changing of the system of the remuneration of trustees, extension of the obligation to file a bankruptcy petition, and the specialisation of courts in bankruptcy proceedings of legal persons.

It will also regulate the termination of a seizure applied with regard to and a judicial mortgage established on debtor’s assets, verification of pledgees’ claims, and the arrangement of court proceedings and appeals that begin before declaration of bankruptcy, and will enhance the implementation of prohibition on business in bankruptcy proceedings.

The aim of the Bill on Amendments to the Fire Safety Act and Other Acts (120 SE), initiated by the Government, is to increase the number of fire safe facilities in Estonia, to make people aware of their responsibility in meeting the fire safety requirements, to reduce the number of fire deaths and to create more flexible possibilities for cooperation between the public and private sector. With a view to reducing carbon monoxide poisoning and deaths caused by it, according to the Bill, carbon monoxide detector will become mandatory where solid fuel heating systems are used.

The Bill on Amendments to the Land Tax Act and the Taxation Act (285 SE), initiated by the Government.

The Bill will establish the basis for the transfer of the land tax information system from the Land Board to the Tax and Customs Board and will solve the problem that has arisen in practice where it is impossible to issue a land tax notice to successors of land who have not re-registered the right of ownership of land in the land register. In addition, the Land Tax Act will be brought into conformity with the State Assets Act according to which the responsibility to pay the taxes related to the assets lies with the user of the state assets. The Bill will specify the right of the Tax and Customs Board to forward information on the tax liability of a taxable person to a rural municipality or city government as necessary.

A problem that has arisen in practice will also be solved. At present, it is possible for successors to avoid payment of land tax if the right of ownership of land has been transferred to them in the course of succession but they have not submitted an application to amend the entry for the owner in the land register to the registrar of the land register. In order to avoid such a situation, in the future, it would also be possible for the Tax and Customs Board to issue a land tax notice to the successor of land to whom the right of ownership of land has transferred according to the succession register.

The Bill on Amendments to the Copyright Act, the Taxation Act and the Principles of Legal Regulation of Industrial Property Act (change of the “blank cassette remuneration” system and extension of the functions of the Estonian Patent Office) (233 SE), initiated by the Government, will amend the right of authors to receive remuneration when their audiovisual works or audio recordings of their works are copied without their consent for personal uses. In the future, the “blank cassette remuneration” will also begin to be distributed to producers of first fixations of films.

The amendments included in the Bill provide that the remuneration collected will have to ensure authors, performers, producers of phonograms and producers of first fixations of films “fair compensation for the estimated damage” that is caused to them due to the limitation of their economic rights and that takes into account how many copies are made for private use.

Under the current law, the amount of the “blank cassette remuneration” is established in law as a percentage of the value of the goods, and the recording devices and storage media subject to the remuneration are established by a Regulation of the Government. As an amendment, the Act will provide a short list of the devices that will have to be mandatorily included in the list under the Government of the Republic Act. Laptop, tablet and desktop computer and smartphone will be such recording devices, and external hard disk drive, USB flash drive and memory card will be such storage media.

The Act will also establish the minimum and maximum remuneration rates applicable to both recording device and storage media. The rate of the remuneration collected on recording devices would be 3–8 euro and the rate of the remuneration collected on storage media would be 0.03–4 euro.

The proposed amendments are necessary in order to ensure greater flexibility of the system and the possibility to adjust it according to changes in customer behaviour, and in order to take into account, when establishing the remuneration rates, what is copied, the volume of copying, and what devices and data media are used to reproduce sound recordings and audiovisual works.

In addition to the above, under the Bill, some implementation tasks relating to copyright will be transferred from the Ministry of Justice to the Estonian Patent Office. Such tasks include the role of the authority that exchanges information regarding orphan work status in Estonia, the exercise of state supervision over the activities of collective management organisations, and the organisation of the work of the copyright committee.

During the debate, Tarmo Kruusimäe (Isamaa), Urmas Espenberg (Estonian Conservative People’s Party), Üllar Saaremäe (Isamaa), Marko Šorin (Centre Party), Imre Sooäär, Madis Milling (Reform Party) and Indrek Saar (Social Democratic Party) took the floor.

A draft Resolution did not find support in the Riigikogu

The Draft Resolution of the Riigikogu “The Proposal to the Government of the Republic to Develop a Hydrogen Strategy” (279 OE), submitted by the Estonian Reform Party Faction, was not supported by the Riigikogu. It was intended to make a proposal to the Government to develop a national hydrogen strategy in order to use the possibilities of hydrogen technologies to reduce carbon emissions and to decarbonise the economy. The hydrogen strategy will provide a basis for integrating hydrogen technologies into the national climate documents “The Fundamentals of Climate Policy until 2050” and “Estonian National Energy and Climate Plan until 2030”.

During the debate, Kaido Höövelson (Centre Party) and Johannes Kert (Reform Party) took the floor.

39 members of the Riigikogu were in favour of passing the Resolution, no one was against and there were no abstentions. However, a Resolution on making a proposal to the Government needs the support of at least 51 members of the Riigikogu.

The sitting ended at 8.12 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.

(Please note that the recording will be uploaded with a delay.)

Riigikogu Press Service
Gunnar Paal,
+372 631 6351, +372 5190 2837
gunnar.paal@riigikogu.ee

 

 

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