Business Leaders to Government: Stop Fast-Tracking Legislation, It Harms the Economy

In a recent appeal to the Estonian government, business associations condemned the ongoing practice of ignoring principles of good legislative process. The government often gives only a few days for feedback on draft laws or excludes business representatives from discussions on proposals with significant economic impact.

The Estonian Employers’ Confederation, the Estonian Chamber of Commerce and Industry, and 38 business organizations emphasized in their message to the Prime Minister that fast-tracking legislation not only impacts the content of bills but also erodes the essential stability needed in a struggling economy. Despite repeated criticism, the government has continued this practice.

Hando Sutter, CEO of the Estonian Employers’ Confederation, highlighted that hastily pushed legislation and lack of stakeholder involvement undermine the government’s stated goal of enhancing economic competitiveness. “Good legislative practice is crucial here because business investment decisions are made with a long-term view. If laws and taxes change overnight without consideration of their impact, this discourages major investments,” he noted. “The result is fewer jobs created and lost tax revenue.”

For example, the government submitted the security tax bill to Parliament without seeking input from business representatives, despite its significant impact on Estonia’s business and tax environment. Planned restructuring of the energy market, which will affect electricity prices and, consequently, the competitiveness of companies, was also not discussed with businesses. Furthermore, business organizations were given only three working days to analyze and comment on next year’s proposed excise tax increases.

Mait Palts, Director General of the Estonian Chamber of Commerce and Industry, noted that it is “highly regrettable” that legislative changes often proceed to the Riigikogu without substantive consultation, driven largely by political agreements such as coalition deals. “Politicians clearly want to implement their programs and adjust regulations as needed, but this cannot happen by rushing changes through without analysis or consultation. For example, organizations were given only three days to analyze changes to excise rates,” Palts said, adding that the disregard for agreed principles of good lawmaking sends a troubling message to society. While there is often talk of doing things better, this intention is not reflected in actions.

Politicians have defended the fast-tracking with the so-called six-month rule, which stipulates that tax changes should take effect no less than six months after being passed. Compliance with this rule is essential for businesses to ensure legal certainty and clarity, but the need for the annual budget process should not come as a surprise and does not justify rushing legislation.

Business leaders have been raising concerns about the government’s fast-tracking of laws and its disregard for good legislative practice since spring and autumn of 2023.