The State Should Not Charge Businesses Additional Fees for Fulfilling Its Core Duties

The Estonian Chamber of Commerce and Industry and the Estonian Employers’ Confederation have informed the Ministry of Economic Affairs and Communications that they oppose the state’s plan to impose an additional regulatory fee on telecommunications companies to secure extra funding for the Consumer Protection and Technical Regulatory Authority.

Business organizations are deeply concerned about the recent trend in which the state seeks to offload its core responsibilities, including regulatory oversight, onto the private sector or expects the private sector to pay additional fees for the state’s core duties. For instance, in early 2022, amendments to the Competition Act were introduced, requiring certain businesses to pay a supervisory fee to finance the tasks of the Competition Authority.

Now, the state intends to impose a similar fee on telecommunications companies. The Ministry of Economic Affairs and Communications recently proposed amendments to the Electronic Communications Act, which include the idea of introducing a regulatory fee based on telecommunications companies’ revenue from communication services to provide additional funding to the Consumer Protection and Technical Regulatory Authority.

No Justifiable Reason for Imposing a Regulatory Fee
The Ministry has outlined a list of tasks and investments it aims to cover with the regulatory fee. For example, the additional funds would be used to improve long-term planning of radio frequencies both in Estonia and internationally, enhance crisis management capabilities for telecommunications continuity, and increase the regulator’s participation in international telecommunications organizations.

However, business organizations have not received feedback from telecommunications companies or other stakeholders indicating significant capability gaps in the work of the telecommunications regulator. Therefore, there is no need to direct additional resources to the Consumer Protection and Technical Regulatory Authority. If the agency deems it necessary to allocate more resources to the telecommunications regulator, this should be done through internal resource redistribution or by improving the efficiency of existing services, for instance, by utilizing more digital solutions.

Neither the state nor businesses should finance all activities that agencies wish to undertake, especially in the current state budget situation. Only activities that are critically important to society should be funded. Based on current knowledge, additional funding for the telecommunications regulator is not essential.

Considering that telecommunications companies already pay a significant amount of taxes to the state and also cover various other fees (such as government levies for radio frequencies and numbering), it is possible to increase funding for the Consumer Protection and Technical Regulatory Authority if needed from these existing sources. Therefore, it is reasonable and fair for the telecommunications regulator to continue to be funded through tax revenues from the state budget.

Imposing the New Fee Would Increase the Number of Public Sector Employees
Under the Ministry’s plan, the introduction of the regulatory fee would increase the number of employees at the telecommunications regulator by 12, representing a growth of over 70% compared to the current workforce. Additionally, operating costs would rise by approximately €700,000 annually.

In the current economic climate, the state should focus on reducing the number of public sector employees, not increasing it. There is a risk that the growth in public sector employees will lead to further over-regulation and an increase in bureaucracy in Estonia, which would threaten the country’s economic competitiveness.

The New Fee Would Also Undermine Confidence in Other Industries
If telecommunications companies are required to pay a regulatory fee, it could create uncertainty among businesses in other sectors, as it would be unclear which industry might be next to face a new oversight fee, regulatory charge, or similar additional burden. The business organizations reiterated to the Ministry that introducing new taxes or fees during an economic downturn is unwise.