The Chamber of Commerce is still critical of the introduction of a car tax

The Estonian Chamber of Commerce and Industry (ECCI) addressed the Finance Committee of the Riigikogu regarding the draft law on motor vehicle tax, which introduces an annual motor vehicle tax and a one-time registration fee from 2025, paid for the registration of cars and vans in the traffic register.

In the current economic downturn, the Chamber of Commerce opposes the introduction of any new tax, including the motor vehicle tax. The establishment of a new tax reduces the international competitiveness of companies and does not help to overcome the economic downturn but works against this goal. There is also a question of how the new tax would affect people's livelihoods and the impact it would have on households for whom the use of a car is an essential part of their freedom of movement.

If the Finance Committee of the Riigikogu finds it reasonable to introduce a motor vehicle tax and registration fee in the current economic downturn, the Chamber of Commerce has submitted several proposals for amending the draft. Key proposed changes include asking the motor vehicle tax and vehicle registration fee only from those vehicles that are registered in the Estonian traffic register and are in active use, i.e., those with valid traffic insurance. The Chamber of Commerce also wanted the draft to include a principle that the amount of motor vehicle tax should be reduced or partially refunded if the vehicle is not registered in the Estonian traffic register throughout the year.

The Chamber of Commerce found that the draft should exclude the tax and fee reducing age component and instead reduce the rates of motor vehicle tax and vehicle registration fees to comply with the principle of affordability. They added that the taxation of phantom vehicles should be excluded from the draft, while suggesting a separate solution for the problem of phantom vehicles. Additionally, the Chamber of Commerce proposed that the use of the funds from the motor vehicle tax and registration fees collected for the state budget should be at least partially earmarked, directing it at least partly for the maintenance and development of road infrastructure and promoting less polluting modes of transport.

"We understand that one of the important goals of introducing a motor vehicle tax is to increase state budget revenues, which is associated with the desire to move towards a balanced state budget, but this goal must not be paramount or based on efforts to collect more tax revenue through the introduction of new taxes. In addition, we are concerned that the new tax and registration fee are intended to be introduced hastily and ignoring important legal and tax policy principles for businesses," emphasized Mait Palts, Director General of the Estonian Chamber of Commerce and Industry.