Opinion: City turns traffic upside down to increase revenues

07.08.2012, 14:54

Tuuli Jõesaar writes in Eesti Päevaleht that Tallinn City Government’s policy to designate whole lanes only for public transport and plans to introduce free public transport serves only one aim: to force more people to register as residents of Tallinn.

The reason is simple: tax revenues earned from every resident are high and such an important revenue for the City’s budget that it justifies such draconian measures.

Namely, the City earns 11.4 percent of the salary paid to a resident of Tallinn. Considering that average gross wages in 2011 were 967 euros, the City earns about 1,000 euros a year on every resident.

Personal income tax makes up about 53 percent of the City’s tax revenues and last year amounted to 220 million euros.

This year the City plans to earn 232 million euros in personal income tax of its residents which is 12 million euros more than a year earlier.

This is a very optimistic target since in six months, Tallinn registered about 1,000 new residents which means only an extra million euros in personal income tax.

In earlier years, the city used a carrot approach to attract more people to register themselves as residents of Tallinn. Last year it offered residents an opportunity to exempt the land under their home from land tax.

The land tax campaign, for instance, is believed to have increased the number of residents registered in Tallinn by about a thousand people.

The City also offers some public transport subsidies for permanent residents of Tallinn.

Tallinn City Government now believes that by making it more difficult for motorists to drive in Tallinn, more people will be interested to register as residents of Tallinn and use free public transport that should be introduced next year.

According to calculations, the direct loss of introducing free public transport in Tallinn is 14 million euros, ie the fare revenue that has been collected until now.

To offset this loss by tax revenues, the City needs to find 14,200 new residents who would earn at least average wages.

While opposition has voiced its doubt whether such a large number of people could be found, the City disagrees.

According to deputy mayor Taavi Aas, it is estimated that there are about 26,000 people living in Tallinn who are not registered as residents.

This view is upheld by the findings of the population census carried out this spring that indicated that the figure is about 24,000 people.