Andrus Tamm (55) works as a book publisher and real estate agent and is the father of five children. He anxiously shares his thoughts on the immediate future of tax increases.
“Let’s start with the fact that with the amendment of the Income Tax Act, the additional tax-free income of a natural person will disappear from 2024 in case of supporting two or more children, and additional tax-free income can no longer be considered for the spouse,” he states. Andrus. “According to my 2022 income tax return, this would mean 7,944 euros less tax relief for three children (in the case of more children, the upper limit still remains 3 children), that is, financially, it would be an amount of 1,682 euros for my family, which is no longer due to us and with which we could have to acquire something important for the family.
Home loan interest is also no longer deducted, which makes the situation difficult for many people. Fortunately, our family has no loans or leases, but we are not even thinking about buying a bigger house. When twins were born in our family – a boy and a girl, we rebuilt our three-room apartment so that the living room now has a kitchen, and the former kitchen became an extra room for the children. But as they say, it can accommodate a lot of good people, and luckily there is also a large children’s playground right behind the house, thanks to the Tallinn city authorities, so you can spend part of the time outside in quality. Another advantage of Tallinn is that, if necessary, public transport is free, and in kindergartens there is also a discount for a kindergarten place for two children, which makes life easier.”
Car tax
When it comes to car tax, Andrus notes with concern that the family car, which is a 2015 7-seater minivan, the annual tax of which is 281 euros, will probably remain their only means of transportation for a long time, because they don’t want to think about buying a new car anymore, because a similar one the car registration fee should cost approx. 6,000 euros. “This means that the acquisition of a new car is out of the question for us, in addition to this, we are also planning to sell the family’s second car, which is the mother of the family’s Škoda Octavia, a 2005 model, in order to optimize the costs arising from car tax, and now we have to think about how to organize logistics related to children in the future. because even though the school and kindergarten are nearby and you can go there on foot, life is not limited to these two institutions only,” says Andrus. “The ironic thing is that when I described this problem on Facebook, the reformist Mario Kadastik wrote that I could buy an electric bus for my family with low annual and registration fees, but he left the fact that such a bus costs about €75,000 new without saying it. Well, what’s wrong with him debating like that, if he lets a smoked eel taste good in the back room of the Riigikogu while matters important to the state are being discussed in the hall…”
Sales tax and income tax increase
“Due to the two percentage point increase in sales tax and income tax, the expenses of a large family will increase even more. Due to these two factors, we get less money, but we have to start paying more in the store,” continues Andrus. “This tax increase affects not only food products, but also car fuel, electricity, room heating, etc. It has been calculated that raising the VAT rate to 22 percent will lead to a 1.67 percent increase in the prices of goods and services. Due to VAT alone, our family will have to pay approximately 40 euros more per month, or 480 euros per year, but this is rather a modest estimate and in fact everything will become even more expensive. At this point, I would like to cite the country of Latvia as a positive example, where it was said that as long as there is such high inflation as it is now, the country will not raise taxes, that is, it is clear which country cares about people and which countries are neglected.”
Reduction of support for extended families
Of course, the country’s anti-child policy, i.e. the reduction of support for large families, cannot be ignored. Support for many large families will be significantly reduced, for example Andrus’s family will lose 200 euros per month due to the so-called “tax hump removal policy”. “If you calculate a little, in three years this money would cover the registration fee for a new car, but the car itself would still be a dream,” says Andrus bitterly. “Perhaps the government coalition has some kind of clever plan and some kind of system will be created so that large families can get a car purchase permit at a discount like during the Soviet times, but it will rather go under the category of dark humor, because as you can see from the policy of the government of the republic so far, they don’t care about children – let them be children of large families or children with disabilities.”
If we sum up all the figures related to the tax changes, Andrus’ family will be in the red with 4,800 euros per year, which is 400 euros in one month. “This is still a modest calculation, because if inflation is taken into account, the real cost is even higher, which the Reform Party does not understand,” says Andrus. “No amount of removing the tax hump will compensate us for what we are losing, because this government coalition will just make us poorer.”
“If I thought before the last Riigikogu elections that the coalition of the Reform Party, the Socialist Party and Estonia 200 was the worst for Estonia, now I am completely convinced of it. It’s not that the tax hump will go away, but because of such state pressure, people will have to find a third job because this government coalition will make people poorer,” concludes Andrus Tamm sadly.
KN
