Estonia Adopts Budget For 2013

By Ulrika Lomas, Tax-News.com, Brussels

20 December 2012

Estonia's parliament, the Riigikogu, has adopted a 2013 budget which includes the goal of reducing the tax burden to the country's pre-recession level through cuts in labor-related taxes.

According to the Finance Ministry, the tax burden will decrease by 0.6% to its lowest level in five years, down to 32.6% of the economy. In particular, unemployment insurance premium rates will be reduced to 3%. However, excise on alcohol will rise by 5%, and there will be a 10% rise in tobacco excise affecting cigarettes spread over the next two years.

Ministry figures predict an increase in budget revenue of 2.2% in 2013, whilst expenditure will increase by 1.1% to EUR7.7bn (USD10.bn). This will amount to a deficit of 0.7% of gross domestic product, although the Ministry also explained that there will be a structural budget surplus of 0.1% of GDP in the year ahead. The debt burden for 2013 is calculated at 12% of GDP - the lowest in the European Union.

The Ministry also promises increases in social security spending amounting to a 6% rise on 2012. Pensions will increase by 5%, and there will also be rises in "need-based child support, unemployment allowances and health insurance expenses." Social benefits will represent 28.3% of the total state budget, and all government areas will receive a budget increase of 4.4% for labor-related expenditure.