Estonian tax burden still among lowest in European Union

This week saw the release of the Eurostat and European Commission publication on tax trends in the European Union. According to the text, the tax burden in EU member states in 2005 was 39.6 percent of gross domestic product (GDP). Compared to 2004, this is a rise of 0.4 percentage points.The tax burden in Estonia in 2005 was 30.9 percent of GDP, a decrease of 0.5 percentage points on 2004. On the one hand, the proportion of direct taxes in GDP decreased as a result of the rise in the tax-free threshold and the fall in the rate of income tax; the proportion of social insurances payments also decreased. On the other hand, rapid growth in the receipt of VAT brought about an increase in the proportion of indirect taxes in GDP.

Compared to other member states of the European Union, the level of tax burden in Estonia is among the lowest. While the proportion of GDP represented by indirect taxes is close to the EU average, the proportion of social insurance payments is slightly smaller and the proportion of direct taxes significantly smaller than the average.

The EU member states with the highest tax burden in 2005 were Sweden and Denmark at 51.3 and 50.3 percent of GDP, respectively. The lowest burden was in Romania, at just 28 percent of GDP. At less than 30 percent were also Lithuania (28.9), Slovakia (29.3) and Latvia (29.4).

The biggest decrease in tax burden between 1995 and 2005 could be seen in Slovakia – 10.3 percentage points (from 39.6 to 29.3 percent). Estonia’s tax burden fell in the same period by 7 percentage points (from 37.9 to 30.9 percent) and Latvia’s by 3.8 percentage points (from 33.2 to 29.4 percent). In sixteen member states the tax burden has increased over the last ten years, with the biggest growth in Cyprus (from 26.7 to 35.6 percent) and Malta (27.3 to 35.3 percent).

Taxation trends in the European Union: 1995-2005 (formerly known as Structures of the Taxation Systems in the European Union) is published annually. In addition to a general analysis and comparison of the tax burdens of member states, the publication also presents figures related to the implicit tax ratio for labour, consumption and capital. The burden arising from environmental taxes is also thoroughly examined.

The Eurostat press release about the publication can be found at, while the publication is available online at

More detailed information about the taxation systems in different countries can be obtained from the public database completed this May as a joint project of the European Commission and EU countries, which includes almost all member states (with the exceptions of Cyprus, Ireland, Malta and Portugal) and all of the most important taxes. Through its search engine you will find information about different aspects of taxation such as tax rates, main deductions, tax revenue received and more. The database is located at
Source: Ministry of Finance

Major source of Tallinn pollution closes

Thursday 28 June marks the official end to the Cohesion Fund project “Tallinn waste management, phase II – closure of the Pääsküla waste centre.”

Ülle-Triin Enden, head of the Cohesion Fund Bureau at the Ministry of the Environment, says that the closure of the waste centre represents the eradication of one of the main sources of pollution in greater Tallinn. “It will lead to a significant reduction in levels of air and water pollution, because the work done in the course of the closure has led to a decrease in production of greenhouse gases, and the centre’s leachate and surface water collection systems will also help to improve the environmental condition of the Pääsküla River,” she explained, adding that the environmental conditions for people living in the area would also improve overall.

The leachate and surface water collection systems were constructed as part of the closure work alongside a gas collection and irrigation system with pumping stations.

Also installed were a vinyl plate restraining wall around the perimeter of the waste centre, geosynthetic clay liners, a drainage mat and additional surface coverage layers with landscaping. Electricity, lighting and remote security systems and an environmental monitoring system were also constructed.

The aim of the project, which comes to an end on Thursday, was to close the Pääsküla waste centre in accordance with the requirements of the European Union directive. The total financing of the project was 173 million kroons, of which the EU’s Cohesion Fund covered 75%.

The Pääsküla waste centre was opened as a temporary centre in 1972, but provided landfill for greater Tallinn’s household and industrial waste for more than 30 years.


Source: Estonian Ministry of the Environment

Enterprise Estonia and Tallinn Airport will cooperate to increase the number of foreign visitors

On 21 June, Enterprise Estonia and Tallinn Airport signed a cooperation contract, which stipulates their common activities in increasing the number of foreign visitors arriving in Estonia.

“The two main concerns in Estonian tourism today are the uneven service quality and insufficient transport connections,” said Chairman of the Enterprise Estonia Management Board Viljar Jaamu. “In 2004 and 2005, tourism increased mainly due to new transport connections, including cheap flights. However, the position of Estonia in air traffic has deteriorated when compared to, say, Latvia, especially in the eyes of people in Western and Southern Europe. The cooperation contract between Tallinn Airport and Enterprise Estonia is an important measure in making travelling to Estonia easier and thereby increasing the country’s earnings from tourism,” added Jaamu.

According to the contract, the parties will be working together to add new destinations, flights leaving from Tallinn and airlines that operate here. This development work is based on the national tourism development plan, which also stipulated the most important target markets. “This does not exclude any other lines, which would contribute significantly to increasing the number of foreign visitors,” explained Jaamu.

According to the contract, Tallinn Airport will offer airlines discounted airport fees when new destinations are opened and also small-scale marketing activities at the airport. Enterprise Estonia will cooperate with airlines and tour operators in the development and distribution of information materials about Estonia, organisation of tours for foreign journalists and tour operators and also in the organisation of campaigns to introduce Estonia as a travel destination.

Source: Enterprise Estonia