Minister of Finance: Income Tax to be Reduced to 13-15%

According to Treasury Minister Kate Pentus-Rosemannus, the income tax rate could be reduced to between 13 and 15 per cent, with all income tax going to local governments. The Minister asserts that this will help to reduce taxes on labour and facilitate local government funding for care.

Pentus stated that labour taxes in Estonia are too high, but at the same time health and social costs have to be covered in an ageing population.

“This can be done by reviewing the tax system as a whole, rather than pecking individual taxes,” wrote by Pentus-Rosemonnus in social networks. The care and funding of older persons is a major concern. As Pentus-Rosemonnus noted, instead of proposing a tax to pay for care services, the problem had to be addressed before the collapse of the second pension.

“Financing care services is only a part of the growing costs of social services and health care associated with population ageing and requiring a holistic approach”, she noted.

According to the Minister of Finance, it would be possible to finance the care service by increasing the share of income tax paid to the local government at the taxpayer’s place of residence, while eliminating the share paid to the State.

“We could discuss how to increase the income base of local governments so that they can provide their people with care for the elderly and cover the growing burden without introducing a new tax. One option – to increase the income of local governments through the State’s share of income tax” – explained Pentus-Rosemannus.

Pentus-Rosemannus also believes that with rising health-care costs, in addition to revising the tax system, there is a need to increase investment in mental health.


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