Estonian Coalition Party to Block Prime Minister’s Tax Proposal

Estonia’s junior coalition party, Isamaa ja Res Publica Liit, plans to block proposals by Prime Minister Andrus Ansip’s Reform Party to raise taxes or scrap tax exemptions, showing growing splits in the minority Cabinet.

Estonia needs to "speedily" cut its tax burden, which has become the main obstacle to raising the Baltic country’s competitiveness and creating new jobs, Isamaa Chairman and former Prime Minister Mart Laar said at a party convention yesterday, according to an e-mail from his office.

Ansip’s two-party coalition, which commands 50 seats in the 101-member parliament, has been cutting spending at the expense of domestic demand to fulfill its main goal of euro adoption next year.

The government expects the currency switch to spur new investments by eliminating currency risks for companies, helping cut a record-high unemployment rate of 14.6 percent. Even if Estonia joins the euro next year, it won’t solve the economy’s fundamental problem: that its competitiveness has been strangled by an overly strong real exchange rate," Neil Shearing, a London-based senior emerging-markets economist at Capital Economics Ltd.,

Bloomberg questions. The government plans to reduce tax exemptions, according to the convergence program approved by the Cabinet last week and published on Finance Ministry’s Web site. It will continue raising taxes on alcohol and tobacco, it said.

Effective Exchange Rate The real effective exchange rate of the kroon, a measure of competitiveness, probably fell about 5 percentage points last year and will decline the same amount in 2010, the Estonian Employers’ Confederation said.

That compares with a 59.5 percent increase since 2000 and an average 24.5 percent increase in the same period for the EU, according to Eurostat methodology. Isamaa’s Laar cited the World Bank’s Doing Business 2010 survey, published in September, which showed Estonia’s total tax rate was higher than that of its neighbors.

Estonia’s rate of 49.1 percent compared with Latvia’s 33 percent, Lithuania’s 42.7 percent, Finland’s 47.7 percent and Russia’s 48.3 percent, according to World Bank’s Web site. Finance Minister Jurgen Ligi of the Reform Party told Aeripaeev newspaper yesterday that the comparison was flawed as it didn’t take into account Estonia’s social insurance.

Laar’s plans contradict Estonia’s euro aspirations as lowering the tax burden isn’t possible with the budget remaining in deficit, Ligi was cited as saying. Isamaa will "in no case" accept the plan to abolish tax breaks on mortgage interest payments, Laar said yesterday in his speech. The party also plans to push through a draft law in parliament that would reduce mortgage borrowers’ liability to protect them from declines in property values, Laar said.

Source http://businessweek.com/news/2010-02-01/estonian-coalition-p~.html

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Estonia lays out euro adoption timetable

The Estonian government re-affirmed Thursday that the Baltic state is on course to adopt the euro as its currency next year.

An overview of Estonia's economic convergence plans published by the country's Finance Ministry said that all of the Maastricht criteria, the rules governing euro entry, had been met well ahead of a European Commission (EC) deadline at the end of January.

The forecast predicted Estonia's gross domestic product would decline by just 0.1 per cent this year and would return to growth of 3.3 per cent in 2011 - a stark contrast to 2009's predicted decline of 14.5 per cent.

Inflation would remain under control at an average of 0.4 per cent for 2010, the Finance Ministry said, allowing Estonia to become the third Eastern European country to enter the eurozone, alongside Slovenia and Slovakia.

In February and April, the EC and European Central Bank (ECB) are scheduled to assess Estonia's readiness. If all goes according to plan, Estonia will win approval at meetings of EU finance ministers on June 8 and July 6 as well as a key EC meeting on 18 June.

Estonian Prime Minister Andrus Ansip has repeatedly stated that he believes Estonia has done everything necessary to swap its currency the kroon for the euro on January 1, 2011. 4.

Source http://monstersandcritics.com/news/business/news/article_152~

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Russians clean up at Europeans

Led by defending Olympic champion Evgeny Plushenko, Russians won three of the four titles in Tallinn, Estonia, at the European figure skating championships, which ended Saturday.

Carolina Kostner of Italy broke the Russian stronghold by winning the women's event on Saturday, while Russian Alena Leonova finished seventh and Russian champion Ksenia Makarova finished ninth.

But with an array of mistakes, Kostner hardly figures in the Winter Olympics picture for the women's event next month in Vancouver.

Kostner fell on a triple loop and popped a triple flip into a single. She landed a triple flip - triple toe loop combination, but it wasn't perfect.

Her final point total of 173.46 pales in comparison to the world record of 210.03 set by Kim Yu-Na of South Korea earlier this season, or even to Canadian champion Joannie Rochette's best score of 191.29, set at the world championships, at which she won the silver medal.

Meanwhile, Plushenko scored world record points of 91.30 in the short program - which defeats the record he set previously at the 2006 Turin Olympics. And his final score of 255.39 was 16.85 points ahead of silver medalist Stéphane Lambiel of Switzerland, who made mistakes, but still finished second in the free skate. Lambiel narrowly defeated Plushenko in the presentation marks.

Former world champion Brian Joubert of France may not have been ready after overcoming an ankle injury, and finished almost 19 points behind Plushenko with numerous mistakes, including an error on his opening quad.

Plushenko wasn't at his best in the free skate, doubling his triple Lutz,. But he landed six triples overall, and a big quadruple toe loop - triple toe loop combination, the only skater in the competition to do so.

Plushenko expressed amazement that the past two world championships have been won without a quad. "At the Olympics, I need to do two quads and I need to skate much better," he said. "The most important competition is still to come.''

Russians have dominated pairs and ice dance in past years, and after some lacklustre years, they're trying to do it again. Yuka Kavaguti and Alexander Smirnov were upset winners of the pairs title, defeating two-time world champions Aliona Savchenko and Robin Szolkowy of Germany, although Savchenko had been ill in the weeks leading up to the European championships.

Oksana Domnina and Maxim Shabalin of Russia won the dance event, despite a controversial original dance to aboriginal music. However their final total of 199.25 doesn't threaten the highest marks in history or even this season.

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