TALLINN — The Estonian ruling coalition decided Monday to cancel the sales and boat taxes set by Tallinn municipal government.

The Tallinn municipal government included a 1 percent sales tax and boat tax in its 2010 budget to revive the city’s declining revenues. The sales tax is set to take effect on July 1, and has been a long-standing dispute between Tallinn and the national government.

The sales and boat tax revocation [private_supervisor]draft will be sent to the parliament on Wednesday, and if accepted the taxes would be revoked on January, 1 2011. Tallinn plans to gather 150 million krooni (€9.6 million) from the sales tax this year, and businesses are having to cough up big bucks for the switchover. Retail companies are paying an estimated 25 million krooni (€1.6 million) and many supermarket chains have complained that updating information systems to administer tax management costs millions of krooni plus additional labor.

Keit Pentus, deputy director of the Reform Party told the press Monday that Tallinn’s sales and boat taxes disturbs the Estonian business environment, given the capital’s dominance over the tiny country’s economy.

“The sales tax has created a situation where all Estonians will have to pay for the price rise applied by one municipality. This is unfair,” said Pentus. “Therefore those are not just local taxes and for this reason one must intervene at the national government level.”

The government’s decision is supported by the the Estonian Employers’ Confederation, which is urging Tallinn Mayor Edgar Savisaar to focus on fighting unemployment instead of implementing a sales tax.

Savisaar said that the government’s proposal is comic.

“The government cut the tax base of the municipalities and took away the money that was meant for schools, kindergarten, sports, roads and culture,” said Savisaar.

Indeed, municipal sales taxes are hardly unprecedented in Estonia.

Tallinn Technical University Professor Sulev Mäeltsemees told Baltic Reports that there are 15 municipalities where a sales tax was established in the 1990s.

Mäeltsemees points out that the national government reduced the income tax, which is the biggest income for counties and towns without shale quarries, by 0.5 percent this year. So the city has to fill the gap from somewhere, and one option is applying new taxes.

Municipalities are allowed to apply eight taxes, and only three had been previously established in Tallinn. Those are advertising, road and street closing taxes and parking fees. [/private_supervisor] [private_subscription 1 month]draft will be sent to the parliament on Wednesday, and if accepted the taxes would be revoked on January, 1 2011. Tallinn plans to gather 150 million krooni (€9.6 million) from the sales tax this year, and businesses are having to cough up big bucks for the switchover. Retail companies are paying an estimated 25 million krooni (€1.6 million) and many supermarket chains have complained that updating information systems to administer tax management costs millions of krooni plus additional labor.

Keit Pentus, deputy director of the Reform Party told the press Monday that Tallinn’s sales and boat taxes disturbs the Estonian business environment, given the capital’s dominance over the tiny country’s economy.

“The sales tax has created a situation where all Estonians will have to pay for the price rise applied by one municipality. This is unfair,” said Pentus. “Therefore those are not just local taxes and for this reason one must intervene at the national government level.”

The government’s decision is supported by the the Estonian Employers’ Confederation, which is urging Tallinn Mayor Edgar Savisaar to focus on fighting unemployment instead of implementing a sales tax.

Savisaar said that the government’s proposal is comic.

“The government cut the tax base of the municipalities and took away the money that was meant for schools, kindergarten, sports, roads and culture,” said Savisaar.

Indeed, municipal sales taxes are hardly unprecedented in Estonia.

Tallinn Technical University Professor Sulev Mäeltsemees told Baltic Reports that there are 15 municipalities where a sales tax was established in the 1990s.

Mäeltsemees points out that the national government reduced the income tax, which is the biggest income for counties and towns without shale quarries, by 0.5 percent this year. So the city has to fill the gap from somewhere, and one option is applying new taxes.

Municipalities are allowed to apply eight taxes, and only three had been previously established in Tallinn. Those are advertising, road and street closing taxes and parking fees. [/private_subscription 1 month] [private_subscription 4 months]draft will be sent to the parliament on Wednesday, and if accepted the taxes would be revoked on January, 1 2011. Tallinn plans to gather 150 million krooni (€9.6 million) from the sales tax this year, and businesses are having to cough up big bucks for the switchover. Retail companies are paying an estimated 25 million krooni (€1.6 million) and many supermarket chains have complained that updating information systems to administer tax management costs millions of krooni plus additional labor.

Keit Pentus, deputy director of the Reform Party told the press Monday that Tallinn’s sales and boat taxes disturbs the Estonian business environment, given the capital’s dominance over the tiny country’s economy.

“The sales tax has created a situation where all Estonians will have to pay for the price rise applied by one municipality. This is unfair,” said Pentus. “Therefore those are not just local taxes and for this reason one must intervene at the national government level.”

The government’s decision is supported by the the Estonian Employers’ Confederation, which is urging Tallinn Mayor Edgar Savisaar to focus on fighting unemployment instead of implementing a sales tax.

Savisaar said that the government’s proposal is comic.

“The government cut the tax base of the municipalities and took away the money that was meant for schools, kindergarten, sports, roads and culture,” said Savisaar.

Indeed, municipal sales taxes are hardly unprecedented in Estonia.

Tallinn Technical University Professor Sulev Mäeltsemees told Baltic Reports that there are 15 municipalities where a sales tax was established in the 1990s.

Mäeltsemees points out that the national government reduced the income tax, which is the biggest income for counties and towns without shale quarries, by 0.5 percent this year. So the city has to fill the gap from somewhere, and one option is applying new taxes.

Municipalities are allowed to apply eight taxes, and only three had been previously established in Tallinn. Those are advertising, road and street closing taxes and parking fees. [/private_subscription 4 months] [private_subscription 1 year]draft will be sent to the parliament on Wednesday, and if accepted the taxes would be revoked on January, 1 2011. Tallinn plans to gather 150 million krooni (€9.6 million) from the sales tax this year, and businesses are having to cough up big bucks for the switchover. Retail companies are paying an estimated 25 million krooni (€1.6 million) and many supermarket chains have complained that updating information systems to administer tax management costs millions of krooni plus additional labor.

Keit Pentus, deputy director of the Reform Party told the press Monday that Tallinn’s sales and boat taxes disturbs the Estonian business environment, given the capital’s dominance over the tiny country’s economy.

“The sales tax has created a situation where all Estonians will have to pay for the price rise applied by one municipality. This is unfair,” said Pentus. “Therefore those are not just local taxes and for this reason one must intervene at the national government level.”

The government’s decision is supported by the the Estonian Employers’ Confederation, which is urging Tallinn Mayor Edgar Savisaar to focus on fighting unemployment instead of implementing a sales tax.

Savisaar said that the government’s proposal is comic.

“The government cut the tax base of the municipalities and took away the money that was meant for schools, kindergarten, sports, roads and culture,” said Savisaar.

Indeed, municipal sales taxes are hardly unprecedented in Estonia.

Tallinn Technical University Professor Sulev Mäeltsemees told Baltic Reports that there are 15 municipalities where a sales tax was established in the 1990s.

Mäeltsemees points out that the national government reduced the income tax, which is the biggest income for counties and towns without shale quarries, by 0.5 percent this year. So the city has to fill the gap from somewhere, and one option is applying new taxes.

Municipalities are allowed to apply eight taxes, and only three had been previously established in Tallinn. Those are advertising, road and street closing taxes and parking fees. [/private_subscription 1 year]

— This is a paid article. To subscribe or extend your subscription, click here.