In recent years, many instances have occurred where, through tax regulation, the Estonian Parliament has broken promises to entrepreneurs. As a rule, the reason for breaking promises is the need to fill the state budget.

On 19.12.2016, the Parliament passed amendments to the Social Tax Act, the Income Tax Act and other laws. Under the amendments, excise duties on beer, fermented beverages and wine will be raised more quickly than was previously stipulated in the timetable set by law. When the Parliament passed the previous timetable, they used a regulatory technique which gave entrepreneurs a clear promise that excise duties would not be raised for a certain period.

On 16.03.2017, the Chancellor of Justice filed an application with the Supreme Court to declare the accelerated speed of raising excise duties unconstitutional.

The Chancellor of Justice notes that Estonia is a state governed by law. A law-governed state honours the promises it has made, even if they seem like a mistake in retrospect. In law, a promise bound by a fixed term (eg a fixed-term employment or lease contract) is more certain than a promise with no term. The state may back out of a fixed-term promise only in exceptional circumstances, eg in the case of a severe economic crisis. When it was decided that the rate of raising excise duty would be increased, no exceptional circumstances applied.

The Supreme Court’s decision will be important because it will help to explain to what extent the Parliament is tied by fixed-term promises imposed by law that they have made. It is not yet known when the Supreme Court’s decision will be announced.