Finance portal: Estonia weighing tax cut for young people, parents of young children

Estonia is weighing a possible change in taxation seeking to support the labor market participation of parents of young children and that of young people aged 18 to 24, according to the finance portal information reports LETA/BNS.

A survey commissioned by the Ministry of Social Affairs and the Ministry of Finance into the possible effects of such cuts will be completed in the fall. Based on the results thereof, the state will deliberate implementing a tax change aimed at supporting the participation of young people in the labor market.

One of the options to be analyzed in the study is eliminating the minimum requirement on social tax for parents of children aged three to eight and for young people aged 18 to 24, Riina Soobik, media relations adviser of the Ministry of Social Affairs, told the finance portal.

Currently, the employer has the obligation to pay the state social tax on the employee’s monthly remuneration, but no less than the minimum amount, which in 2019 is 165 euros. A self-employed person is subject to a minimum quarterly social tax of 495 euros, or a total of 1,980 euros per year.

The Polish government on Tuesday reduced taxes imposed on the wages of people aged 26 and younger with the aim to curb emigration. Young people’s remuneration is expected to grow significantly as employers no longer have to pay an 18-% tax on their wages.

The Estonian Ministry of Social Affairs does not deem such a measure necessary for reducing emigration in Estonia. Dmitri Jegorov, undersecretary for tax and customs policy at the Ministry of Finance, too, told that he does not support a tax exemption or differentiation in such a form.

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