TALLINN — As European central banks lowered interest rates throughout 2009 to encourage lending, Estonia’s Ministry of Finance is now off the hook for a large amount of mortgage tax relief for last year.
The program offers tax refunds as a percentage of a homeowner’s mortgage interest payments. In 2008 the mortgage owners paid up to 5 billion krooni (€319 million) for interest, but last year only 2 billion krooni (€127 million) was paid, therefore the government only needed to [private_supervisor]refund 240 million krooni (€15 million) for mortgage tax relief this year, half of what was paid in 2008.
“As the interest payments were very low in 2009, then there are less refunds as well,” Piret Seeman, press spokeswoman of the Ministry of Finance told Baltic Reports.
Not only does this ease the skin-tight national budget, which is streamlined to stay on-track for a 2011 eurozone entry, but it also solves one a bitter debate between the two parties of Estonia’s ruling coalition.
The Reform Party and the Union of Pro Partia and Res Publica, who make up the ruling coalition, did not reach an agreement on the matter during the country’s difficult budget debates. However, as it’s now clear the government will not have to spend as much on the tax refund, the problem’s solved itself.
IRL leader Mart Laar strongly criticized the Reform Party’s plan to end the home loan interest relief program at the end of January, arguing that it would increase the mortgage payments of 160,000 families. Minister of Finance Jürgen Ligi rebutted that IRL merely sought to maintain tax relief for the wealthy.
The mortgage refund relief was established in 1996 to encourage home buying. The Bank of Estonia suggested freezing it in 2005, as mortgages became prevalent in the rapidly developing economy, but the Riigikogu was cool to the proposal.
[/private_supervisor] [private_subscription 1 month]refund 240 million krooni (€15 million) for mortgage tax relief this year, half of what was paid in 2008.
“As the interest payments were very low in 2009, then there are less refunds as well,” Piret Seeman, press spokeswoman of the Ministry of Finance told Baltic Reports.
Not only does this ease the skin-tight national budget, which is streamlined to stay on-track for a 2011 eurozone entry, but it also solves one a bitter debate between the two parties of Estonia’s ruling coalition.
The Reform Party and the Union of Pro Partia and Res Publica, who make up the ruling coalition, did not reach an agreement on the matter during the country’s difficult budget debates. However, as it’s now clear the government will not have to spend as much on the tax refund, the problem’s solved itself.
IRL leader Mart Laar strongly criticized the Reform Party’s plan to end the home loan interest relief program at the end of January, arguing that it would increase the mortgage payments of 160,000 families. Minister of Finance Jürgen Ligi rebutted that IRL merely sought to maintain tax relief for the wealthy.
The mortgage refund relief was established in 1996 to encourage home buying. The Bank of Estonia suggested freezing it in 2005, as mortgages became prevalent in the rapidly developing economy, but the Riigikogu was cool to the proposal.[/private_subscription 1 month] [private_subscription 4 months]refund 240 million krooni (€15 million) for mortgage tax relief this year, half of what was paid in 2008.
“As the interest payments were very low in 2009, then there are less refunds as well,” Piret Seeman, press spokeswoman of the Ministry of Finance told Baltic Reports.
Not only does this ease the skin-tight national budget, which is streamlined to stay on-track for a 2011 eurozone entry, but it also solves one a bitter debate between the two parties of Estonia’s ruling coalition.
The Reform Party and the Union of Pro Partia and Res Publica, who make up the ruling coalition, did not reach an agreement on the matter during the country’s difficult budget debates. However, as it’s now clear the government will not have to spend as much on the tax refund, the problem’s solved itself.
IRL leader Mart Laar strongly criticized the Reform Party’s plan to end the home loan interest relief program at the end of January, arguing that it would increase the mortgage payments of 160,000 families. Minister of Finance Jürgen Ligi rebutted that IRL merely sought to maintain tax relief for the wealthy.
The mortgage refund relief was established in 1996 to encourage home buying. The Bank of Estonia suggested freezing it in 2005, as mortgages became prevalent in the rapidly developing economy, but the Riigikogu was cool to the proposal.[/private_subscription 4 months] [private_subscription 1 year]refund 240 million krooni (€15 million) for mortgage tax relief this year, half of what was paid in 2008.
“As the interest payments were very low in 2009, then there are less refunds as well,” Piret Seeman, press spokeswoman of the Ministry of Finance told Baltic Reports.
Not only does this ease the skin-tight national budget, which is streamlined to stay on-track for a 2011 eurozone entry, but it also solves one a bitter debate between the two parties of Estonia’s ruling coalition.
The Reform Party and the Union of Pro Partia and Res Publica, who make up the ruling coalition, did not reach an agreement on the matter during the country’s difficult budget debates. However, as it’s now clear the government will not have to spend as much on the tax refund, the problem’s solved itself.
IRL leader Mart Laar strongly criticized the Reform Party’s plan to end the home loan interest relief program at the end of January, arguing that it would increase the mortgage payments of 160,000 families. Minister of Finance Jürgen Ligi rebutted that IRL merely sought to maintain tax relief for the wealthy.
The mortgage refund relief was established in 1996 to encourage home buying. The Bank of Estonia suggested freezing it in 2005, as mortgages became prevalent in the rapidly developing economy, but the Riigikogu was cool to the proposal. [/private_subscription 1 year]
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