The Riigikogu concluded the first reading of four Bills.

According to the State Budget for 2023 Bill (708 SE), initiated by the Government, the state budget will focus on ensuring Estonia’s security and the coping of people and businesses in the crises caused by Russia’s large-scale war.

The total volume of the state budget revenue will be 15.57 billion euro in 2023. Compared to the budget adopted in autumn 2021, budget revenues will grow by 2.19 billion euro or 16.4 per cent. The total volume of expenditure will be 16.79 billion euro in 2023, increasing by 2.59 billion euro or 18 per cent compared to 2022. The state will make investments in the amount of 775 million euro, which will be approximately 30 million euro more than this year.

According to the proposal submitted to the parliament, in 2023, defence expenditure in Estonia will for the first time exceed the one-billion-euro limit, that is 2.9 per cent of GDP. In 2024, Estonia’s defence spending level will exceed three per cent of GDP.

The Bill provides for a support of 166 million euro to energy efficiency and renewable energy investments and housing. The plan for speeding up renewable energy will receive additional funding. An automatic subsidy for domestic heating, electricity as well as gas bills will be applied to household consumers from 1 October to the end of March, which will take around 200 million euro from the budget in terms of the whole heating season. The option of the universal service will extend to micro and small enterprises. The liquidity measures will extend to large enterprises to mitigate the impact of the rise in energy prices.

The state budget provides that the minimum remuneration rate for teachers will rise from 1412 euro to 1749 euro or by 23.9 per cent in 2023, the minimum salary of rescue workers will rise from 1190 euro to 1620 euro or by 36 per cent and the minimum salary of police officers will rise from 1575 euro to 1849 euro or by 17 per cent.

Additional 41.5 million euro will be allocated to higher education in 2023 and funding will be increased by an additional 15 per cent in each subsequent year.

The tax burden for 2023 will amount to 33.3 per cent of GDP which will be 0.6 per cent higher than in 2022.

During the debate, representatives of factions Ivari Padar (Social Democratic Party), Martin Helme (Estonian Conservative People’s Party), Priit Sibul (Isamaa), Mart Võrklaev (Reform Party) and Jaak Aab (Centre Party) took the floor and presented their positions and opinions on the Bill on next year’s state budget.

The Estonian Centre Party Faction moved to reject the Bill at the first reading. The result of voting: 19 votes in favour and 48 against. The motion was not supported. The first reading was concluded. The deadline for submission of motions to amend was set as 31 October.

The Bill on Amendments to the Alcohol, Tobacco, Fuel and Electricity Excise Duty Act and the Act on Amendments to the Alcohol, Tobacco, Fuel and Electricity Excise Duty Act (705 SE), initiated by the Government, will postpone by one year the rises in excise duties that were due in 2023–2026. This way, the pre-crisis level for excise duty rates will be achieved in 2027.

An amendment lowered the excise duties for electricity and certain fuels for two years from 1 May 2020 in order to mitigate the impact that the crisis due to the spread of the COVID-19 virus would have for fuel consumers, and to facilitate economic subsistence. An Act adopted at the end of 2021 provided for a gradual four-year restoration of the excise duties for fuel and electricity to the pre-crisis level starting from 1 May 2023.

As a result of the Bill, the agricultural sector and oil shale mines will be able to use diesel fuel for specific purposes until 30 April 2024 at the minimum rate of the European Union which is 21 euro per 1000 litres. From 1 May 2024, the rate of excise duty on diesel fuel for specific purposes will rise to 107 euro per 1000 litres for the agricultural sector and oil shale mines will be able to use only diesel fuel taxed at the standard rate.

During the debate, Aivar Sõerd (Reform Party) and Aivar Kokk (Isamaa) took the floor.

Under the Bill on Amendments to the Income Tax Act (706 SE), initiated by the Government, the income exempt from income tax will be increased from 500 euro to 654 euro per month. Around 368,000 people or 56 per cent of working-age people will benefit from the amendment. People who earn 654–1200 euro per month will gain most, that is, 370 euro per year, from the amendment of the minimum rate for tax-exempt income.

The amendment will not concern the people receiving the old-age pension. The tax-exempt income to the extent of the average old age pension will begin to apply to them from 1 January of the new year and the regressive tax-exempt income system will not apply to their income. The average old-age pension is projected to be 704 euro in 2023.

The expenditure of the amendment in the state budget will be 82 million euro in 2023, 80 million in 2024, 77 million in 2025 and 74 million in 2026.

The Bill will extend the opportunity for legal persons to make donations and gifts free of income tax for maintaining the territorial integrity and sovereignty of Ukraine as well as for giving and organising humanitarian aid. It will be possible to make donations free of income tax until the end of next year to NPO Estonian Refugee Council, NPO Mondo, the Ukrainian Cultural Centre, the National Defence Promotion Foundation, the Estonian Red Cross, the Estonian Voluntary Rescue Association and Tallinn Old Town Rotary Club.

During the debate, Aivar Kokk (Isamaa), Maris Lauri (Reform Party) and Reili Rand (Social Democratic Party) took the floor.

The Bill on Amendments to the Funded Pensions Act (707 SE), initiated by the Government of the Republic, will accelerate the reimbursement of the 4% contributions to the funded pension not made during the suspension of contributions from 1 July 2020 to 31 August 2021, which initially was to take place in January of 2023 and 2024 for those who had decided to remain in the pension scheme. Instead of the two years as initially planned, the contributions will be reimbursed to the full extent in one year, in January 2023.

The amounts to be reimbursed will be calculated according to the actual contributions but their final amount will become clear at the beginning of January 2023 when the average return of mandatory pension funds in the period from 1 July 2020 to 31 December 2022 will be known. If the average return is positive, the amounts reimbursed to members of pension schemes will be increased in proportion to this. The amounts to be reimbursed will be allocated in January 2023 and additional pension fund units will be issued to members of pension schemes on account of this.

According to the projection, in 2023, around 276 million euro will be spent on the reimbursement, 248 million euro of which will account for the principal amount and 28 million euro will account for interest.

During the debate, Andres Sutt (Reform Party) and Aivar Kokk (Isamaa) took the floor.

Minister of Economic Affairs and Infrastructure Riina Sikkut did not have to reply to the interpellation concerning the LNG carrier to be moored in Finland because the interpellators had withdrawn their interpellation.

The sitting ended at 7.10 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
[email protected]
Questions: [email protected]