Address by the Minister of Foreign Affairs Kristiina Ojuland at the event "Dialogue with a new Member State: Estonia" in Vienna
Dear Mr Chairman,
Excellences,
Ladies and gentlemen!
Allow me to start by expressing my gratitude for the invitation to speak here in front of such a diverse and distinguished audience!
Since my previous visit to Austria in January 2003, a lot has changed in the relations between our countries. On 1 May this year Estonia joined the European Union and we are sincerely thankful for the Austrian support and encouragement during our long accession process.
Estonia’s accession to the European Union has given a new momentum to the already excellent relations between Austria and Estonia. Economic, political and cultural relations between the two have been constantly tightening in recent years. Austrian business delegations, for example, are now visiting Estonia on a regular basis. Next month we are glad to welcome to Estonia a delegation of Austrian journalists. As foreign minister I am particularly happy to note that numerous young Estonian diplomats have had the opportunity to study in the Vienna Diplomatic Academy.
Strong traditions of music in both Austria and Estonia have laid a solid basis for cultural interchange between the two countries. The concerts by Wiener Symphoniker in 2000 and Vienna Boy’s Choir (Wiener Sängerknaben) in 2001 were the musical highlights of those years in Estonia. Austria has become a highly respected destination for work and study for many Estonian musicians. For example, the Chief Conductor of Tonkünstler Orchestra of Lower Austria (Niederösterreich) is Kristjan Järvi. Bass singer Ain Anger works in Staatsoper and mezzosoprano Annely Peebo in Volksoper. Also, our famous composer Arvo Pärt has many connections to Austria.
Ladies and gentlemen,
The year 2004 has been a year of important changes for Estonia. Those days are over, when we could be referred to as a "nation in transition". Our accession to the European Union, as well as to NATO, were the culminations of a long process. It took us almost thirteen years to achieve these goals. On the one hand, thirteen years has been a long period of time, when we often had to sacrifice our momentary concerns in the interest of long-term perspectives and goals. On the other hand, the development of independent Estonia has been fast-paced, perhaps even faster than we could have hoped for in early 1990s.
I would like to use this opportunity here to introduce you Estonia as a newcomer to the European Union. Allow me start by taking a brief look back to history. Membership in the European Union and NATO were set as the main Estonian foreign policy goals immediately after the country regained independence in 1991. Pan-European ideas in Estonia are, however, much older than that. “Young Estonia,” an influential literary movement in Estonian history, famously called for “being Estonians but becoming Europeans” already in early 20th century. One of the major proponents of the Pan-European movement in Estonia during the 1920s, Kaarel Robert Pusta, former Estonian foreign minister and ambassador to France, argued in 1929, echoing the ideas of the great Austrian, Richard Coudenhove-Kalergi, that “everything that strengthens the unity of Europe, also provides security for our […] self-existence.”
In November 1995, Estonia submitted the application to become a member of the European Union, and in 1997 received an invitation – together with Poland, Slovenia, Czech Republic, Hungary and Cyprus – to start accession negotiations. The Accession Conference was opened in March 1998 in Brussels, but the actual process started with full vigour during the Austrian presidency in September 1998. The Accession Conference was concluded in December 2002 in Copenhagen, and the Accession Treaty was signed in Athens on 16 April, last year. A successful referendum on European accession was held on 14 September 2003.
Respected audience,
By now Estonia has been a full member of the European Union for nearly five months. Membership in the Union has provided Estonia with unprecented opportunities that the country has never had in its history. Since 1 May, the internal market of the Union has been, without exceptions, open to Estonian exports. There has been a considerable increase in the interest of foreign firms in the opportunities that our economy can offer and in our favourable investment climate. Accession to the European Union has increased the individuals’ opportunities - tourism and student exchange have grown substantially.
However, membership in the European Union also means considerably bigger responsibilities and commitments. It is not “the end of history” for Estonian foreign policy, but rather a new beginning on a completely new and much more demanding level.
Estonia supports the development of the European Union where the equal treatment of all Member States is assured. This standpoint also defined our positions at the Intergovernmental Conference (IGC) on the Constitutional Treaty. Let me emphasise here, that Austria and Estonia cooperated actively at the IGC, both belonging to the so-called likeminded group of countries of which Austria was one of the leaders. At the Intergovernmental Conference, Estonia was of the opinion, that in the European Commission there should be a fully warranted commissioner from each Member State. As a small country, we also found that for the adequate representation in the European Parliament of the political forces present in a Member State, the number of seats per state should be at least five. As for the voting rules in the Council, we supported the qualified majority voting in principle, but maintained the position that in sensitive fields, like taxation and social insurance, decisions should primarily be made on the national level.
Ladies and gentlemen,
As far as the Union’s external relations are concerned, Estonia totally shares the majority of the other Member States’ conviction that the European Union’s international role needs to be increased. There exists a lot of potential for this, considering that the collective opinion and actions of twenty-five countries as a whole carry much more weight than the simple sum of the actions of twenty-five individual countries.
We all know that during the last few years, security risks have increased in the world, and, in this context, Europe is no exception. The terror attack in Madrid last March was a tragic proof of this. Regarding the European Security and Defence Policy (ESDP), Estonia would support increasing the Union’s military capabilities. We support the EU and NATO agreement – Berlin Plus – which enables the European Union, within the framework of the so-called Petersberg Tasks, to also carry out military operations. The further development of the ESDP, however, should not cause a weakening of the trans-Atlantic link, or duplicate NATO. It is clear, that the basis for an effective European security policy is a constructive partnership between NATO and the EU.
Estonia will continue to actively participate in the international peace operations undertaken by the European Union and NATO. Members of the Estonian Defence Force continue to take part in missions ensuring peace and security in Kosovo, Bosnia and Herzegovina, as well as in Afghanistan and Iraq.
Ladies and gentlemen,
On 1 May the borders of the European Union were redrawn. Austria has moved from the geographical periphery of the Union to its very center, Estonia has become one of the member countries at its border. Last December, the Member States decided to establish the European Border Agency. Even before accession, Estonia had participated in various EU projects dealing with the guarding of external borders, and now, as an EU member, we would like to increase our contribution even more. With this goal in mind, Estonia has presented its candidacy to be the host of the Border Agency’s seat.
It goes without saying, that security and prosperity in the European Union are also dependent on the stability of the countries beyond its borders, in the immediate vicinity of the Union. Hence we have to continue working not merely towards further integration within the enlarged Union, but also towards more active cooperation between the Union and its neighbours.
This means aiming at the potential membership of the remaining candidate countries. Estonia finds that future enlargement must be based upon the same principles and criteria, that have applied until now.
It also applies to actively developing relations and co-operation projects with the European Union’s Eastern and Southern next-door neighbours. Bearing this in mind, the formulation of the European Neighbourhood Policy is of utmost importance. Helping Ukraine, Belarus, and Moldova, as well the Western Balkans and the areas of Middle-East and Northern Africa, contributes to the security and prosperity of the whole region. It is most welcome that the countries of Southern Caucasus have also been encompassed in the European Neighbourhood Policy.
It is essential to create the means for economic integration, and the intensification of political and cultural relations, to promote cross-border and regional co-operation, and to prevent any possible development of economic and political conflicts between the European Union and its new neighbours. We are glad to note, that the formulation of the concrete action plans have been based upon a differentiated approach towards every state. We welcome the fact that Agenda 2007 comprises the European Neighbourhood Policy and look forward to the Commission’s plan for a new European Neighbourhood Instrument. Active involvement is also expected from the countries that these policies are aimed at. Ukraine has set a good example, expressing a clear wish for a more intensive level of partnership with the European Union.
Developing relations with new neighbours is the endeavour where the historical experience and the know-how of new Member States are particularly useful. Estonia already has substantial experience with carrying out bilateral development cooperation with several countries, Ukraine and Georgia in particular. We also expect to intensify our contacts with Moldova. Georgia has demonstrated its commitment to national renewal, and this principled political approach must be supported in every way possible. Estonian Government has adopted an extensive action plan for assisting Georgia.
Estonia is prepared to continue supporting these and other countries in their endeavours to carry out democratic and market economy reforms. Our contribution could be particularly valuable in the Information and Communication Technologies sector, as well as in the sphere of e-government. This is where Estonia itself has been rather successful in adopting new technologies and introducing reforms.
We must also be ever more prepared to contribute to the assisting of poorer states and the easing of humanitarian crises. Step-by-step, we are finding ways to increase the amount of resources devoted to development co-operation and move closer to the EU Member States’ level.
Ladies and gentlemen,
Of particular importance are the relations and cooperation between the European Union and Russia. The European Council on 12 December 2003 reaffirmed the Union’s determination to build a balanced and reciprocal partnership with Russia based on the rule of law, democracy, human rights and fundamental freedoms, and market economy.
However, the increasingly intensive cooperation between the European Union and Russia has not been as successful as expected, and more serious efforts are necessary. The first meeting of the Russia-European Union Permanent Partnership Council (PPC) held in Luxembourg at the Foreign Ministers level on 27 April gave hope that progress can be made. The signing of the protocol on extending the Partnership and Cooperation Agreement to new Member States was clearly a positive development. Now efforts should be directed towards the unconditional ratification of the protocol. We hope that the European Union stands united in this question and defends the interests of its Member States. We also hope that the results of the 21 May 2004 summit meeting create basis for the further development of the EU-Russian relations within the framework of the so-called Four Common Spaces.
It goes without saying that tighter economic relations between the European Union and Russia are useful and beneficial for both, although we have to bear in mind that common values and democratic standards should not be sacrificed for economic gains. The enlargement has created entirely new opportunities for European Union and Russian businesses. But so far, the European Union has not been very successful in convincing Russia that the completion of its democratic and market economy reforms is a precondition for more successful economic integration with the European Union. A more concerted approach by the member states of the Union is needed. As an important development towards successful economic integration, the European Union and Russia signed a bilateral protocol on 21 May this year on terms for Russia's entry into the World Trade Organisation (WTO).
Dear audience,
In recent years, the economic growth in the European Union has slowed down. The average GDP growth in the Member States in 2003 was below 1%. Unemployment in Europe is nearly twice as high as in the United States. This indicates the seriousness of the challenges facing Europe and should convince us all that both the global competitiveness of the European Union, as well as competition within the Union itself should be increased. This is the most reliable way of ensuring stability and long-term development of Europe’s economic environment.
Estonia has been in the forefront among the new European Union members in this respect. The bases for Estonia’s success have been its economic reforms, its liberal economy and its free trade policies with other countries. According to the World Economic Forum Global Competitiveness Report, in 2003 Estonia ranked 22nd, ahead even of seven EU Member States. In the 2004 Heritage Foundation / Wall Street Journal Index of Economic Freedom, Estonia ranks sixth.
Efficiency, increased competitiveness and sustainable economic growth are the core goals of the Lisbon strategy and Estonia completely supports these endeavours. Creating more employment in Europe, investment in human resources and life-long learning are crucial in this respect. To secure economic growth in Europe and increase its competitiveness, research and development (R&D), and scientific innovations should be prioritised even more. Increased attention has to be paid to the development of information and communication as well the so-called frontier technologies, biotechnology in particular. Estonia is among the most successful new EU members also in this respect, especially what concerns the development of Information and Communication Technologies (ICT). According to the World Economic Forum’s The Global Information Technology Report 2003-2004, for example, Estonia ranks thirteenth in the use of ICT by the Government, and third in the political and regulatory environment sub-index.
In order to revitalize the European economy, it is important that all Member States follow the conditions prescribed on their fiscal policy in the Stability and Growth Pact. Maximization of the potential of all Member States rather than suffocating it with red tape is also of particular importance. Another important condition is the free movement of labour. We hope that this will in the near future complement for all new member states the free movement of capital, goods and services in the European single market.
Ladies and gentlemen,
Estonia’s experiences with successful economic reforms have led us to support the maintaining of unanimity in taxation in the European Union decision-making process. The EU Member States have different taxation systems that have evolved in particular national and historical contexts. Tax competition is essential for enhancing the competitiveness of the Union and for achieving the Lisbon goals. Each Member State’s sovereign right to establish its tax rates for direct taxes is an important tool for this.
Estonia and other new members of the European Union have been accused of low tax rates, and Estonia in particular has been accused on having no corporate tax. These accusations are clearly erroneous and stem from domestic political debates.
Estonia is no tax paradise. The general tax burden in Estonia is of approximately the same level as in other Member States. Our taxation system is simple and transparent with few exemptions or particularities. For this it has gained recognition from international institutions such as the OECD and IMF. For an objective analysis of the level of taxation, the taxation system has to be interpreted in its integrity. Estonia has decided to lay its tax burden more on consumption and less on earnings. Estonia’s VAT is 18% - the average rate among Member States. Uniform income as well as corporate tax rates in Estonia are both 26%. The zero corporate tax only concerns reinvested profits. All distributed profits are taxed according to the general principles. I would also like to add that Estonia does not give state aid to companies through taxation measures.
Linking tax policy questions to the distribution of resources of structural funds, as suggested by some politicians, is not reasonable. The distribution of structural funds is and has to be based on the GDP of the Member States and the real needs of the state for catching up with the rest, not on the amount of tax revenues collected. Consequently, Estonian GDP growth results in greater contributions to the EU budget and, in the long term, facilitates the transformation of Estonia into a net-contributor to the EU budget.
Dear Mr Chairman,
Ladies and gentlemen,
In conclusion, I would like to stress that Estonia aims to be a constructive, active, and positively minded member of the European Union. Although the places of Estonia and Austria in the enlarged European Union are in many ways different, our vision about the future of the Union, as our successful cooperation during the recent years has proved, coincides in various important respects.
There is a lot of potential for even tighter political, economic and cultural relations between our countries. Estonia provides the investors and entrepreneurs with considerable opportunities. It is a country with untouched nature – a perfect place for ecotourism. Its coastline and islands, as well old Hanseatic cities have been praised by many. Tallinn, its capital, belongs to the UNESCO world heritage list and is one of the best preserved medieval cities in Europe. Come and see for yourselves! Welcome to Estonia!
Thank you for your attention.
Excellences,
Ladies and gentlemen!
Allow me to start by expressing my gratitude for the invitation to speak here in front of such a diverse and distinguished audience!
Since my previous visit to Austria in January 2003, a lot has changed in the relations between our countries. On 1 May this year Estonia joined the European Union and we are sincerely thankful for the Austrian support and encouragement during our long accession process.
Estonia’s accession to the European Union has given a new momentum to the already excellent relations between Austria and Estonia. Economic, political and cultural relations between the two have been constantly tightening in recent years. Austrian business delegations, for example, are now visiting Estonia on a regular basis. Next month we are glad to welcome to Estonia a delegation of Austrian journalists. As foreign minister I am particularly happy to note that numerous young Estonian diplomats have had the opportunity to study in the Vienna Diplomatic Academy.
Strong traditions of music in both Austria and Estonia have laid a solid basis for cultural interchange between the two countries. The concerts by Wiener Symphoniker in 2000 and Vienna Boy’s Choir (Wiener Sängerknaben) in 2001 were the musical highlights of those years in Estonia. Austria has become a highly respected destination for work and study for many Estonian musicians. For example, the Chief Conductor of Tonkünstler Orchestra of Lower Austria (Niederösterreich) is Kristjan Järvi. Bass singer Ain Anger works in Staatsoper and mezzosoprano Annely Peebo in Volksoper. Also, our famous composer Arvo Pärt has many connections to Austria.
Ladies and gentlemen,
The year 2004 has been a year of important changes for Estonia. Those days are over, when we could be referred to as a "nation in transition". Our accession to the European Union, as well as to NATO, were the culminations of a long process. It took us almost thirteen years to achieve these goals. On the one hand, thirteen years has been a long period of time, when we often had to sacrifice our momentary concerns in the interest of long-term perspectives and goals. On the other hand, the development of independent Estonia has been fast-paced, perhaps even faster than we could have hoped for in early 1990s.
I would like to use this opportunity here to introduce you Estonia as a newcomer to the European Union. Allow me start by taking a brief look back to history. Membership in the European Union and NATO were set as the main Estonian foreign policy goals immediately after the country regained independence in 1991. Pan-European ideas in Estonia are, however, much older than that. “Young Estonia,” an influential literary movement in Estonian history, famously called for “being Estonians but becoming Europeans” already in early 20th century. One of the major proponents of the Pan-European movement in Estonia during the 1920s, Kaarel Robert Pusta, former Estonian foreign minister and ambassador to France, argued in 1929, echoing the ideas of the great Austrian, Richard Coudenhove-Kalergi, that “everything that strengthens the unity of Europe, also provides security for our […] self-existence.”
In November 1995, Estonia submitted the application to become a member of the European Union, and in 1997 received an invitation – together with Poland, Slovenia, Czech Republic, Hungary and Cyprus – to start accession negotiations. The Accession Conference was opened in March 1998 in Brussels, but the actual process started with full vigour during the Austrian presidency in September 1998. The Accession Conference was concluded in December 2002 in Copenhagen, and the Accession Treaty was signed in Athens on 16 April, last year. A successful referendum on European accession was held on 14 September 2003.
Respected audience,
By now Estonia has been a full member of the European Union for nearly five months. Membership in the Union has provided Estonia with unprecented opportunities that the country has never had in its history. Since 1 May, the internal market of the Union has been, without exceptions, open to Estonian exports. There has been a considerable increase in the interest of foreign firms in the opportunities that our economy can offer and in our favourable investment climate. Accession to the European Union has increased the individuals’ opportunities - tourism and student exchange have grown substantially.
However, membership in the European Union also means considerably bigger responsibilities and commitments. It is not “the end of history” for Estonian foreign policy, but rather a new beginning on a completely new and much more demanding level.
Estonia supports the development of the European Union where the equal treatment of all Member States is assured. This standpoint also defined our positions at the Intergovernmental Conference (IGC) on the Constitutional Treaty. Let me emphasise here, that Austria and Estonia cooperated actively at the IGC, both belonging to the so-called likeminded group of countries of which Austria was one of the leaders. At the Intergovernmental Conference, Estonia was of the opinion, that in the European Commission there should be a fully warranted commissioner from each Member State. As a small country, we also found that for the adequate representation in the European Parliament of the political forces present in a Member State, the number of seats per state should be at least five. As for the voting rules in the Council, we supported the qualified majority voting in principle, but maintained the position that in sensitive fields, like taxation and social insurance, decisions should primarily be made on the national level.
Ladies and gentlemen,
As far as the Union’s external relations are concerned, Estonia totally shares the majority of the other Member States’ conviction that the European Union’s international role needs to be increased. There exists a lot of potential for this, considering that the collective opinion and actions of twenty-five countries as a whole carry much more weight than the simple sum of the actions of twenty-five individual countries.
We all know that during the last few years, security risks have increased in the world, and, in this context, Europe is no exception. The terror attack in Madrid last March was a tragic proof of this. Regarding the European Security and Defence Policy (ESDP), Estonia would support increasing the Union’s military capabilities. We support the EU and NATO agreement – Berlin Plus – which enables the European Union, within the framework of the so-called Petersberg Tasks, to also carry out military operations. The further development of the ESDP, however, should not cause a weakening of the trans-Atlantic link, or duplicate NATO. It is clear, that the basis for an effective European security policy is a constructive partnership between NATO and the EU.
Estonia will continue to actively participate in the international peace operations undertaken by the European Union and NATO. Members of the Estonian Defence Force continue to take part in missions ensuring peace and security in Kosovo, Bosnia and Herzegovina, as well as in Afghanistan and Iraq.
Ladies and gentlemen,
On 1 May the borders of the European Union were redrawn. Austria has moved from the geographical periphery of the Union to its very center, Estonia has become one of the member countries at its border. Last December, the Member States decided to establish the European Border Agency. Even before accession, Estonia had participated in various EU projects dealing with the guarding of external borders, and now, as an EU member, we would like to increase our contribution even more. With this goal in mind, Estonia has presented its candidacy to be the host of the Border Agency’s seat.
It goes without saying, that security and prosperity in the European Union are also dependent on the stability of the countries beyond its borders, in the immediate vicinity of the Union. Hence we have to continue working not merely towards further integration within the enlarged Union, but also towards more active cooperation between the Union and its neighbours.
This means aiming at the potential membership of the remaining candidate countries. Estonia finds that future enlargement must be based upon the same principles and criteria, that have applied until now.
It also applies to actively developing relations and co-operation projects with the European Union’s Eastern and Southern next-door neighbours. Bearing this in mind, the formulation of the European Neighbourhood Policy is of utmost importance. Helping Ukraine, Belarus, and Moldova, as well the Western Balkans and the areas of Middle-East and Northern Africa, contributes to the security and prosperity of the whole region. It is most welcome that the countries of Southern Caucasus have also been encompassed in the European Neighbourhood Policy.
It is essential to create the means for economic integration, and the intensification of political and cultural relations, to promote cross-border and regional co-operation, and to prevent any possible development of economic and political conflicts between the European Union and its new neighbours. We are glad to note, that the formulation of the concrete action plans have been based upon a differentiated approach towards every state. We welcome the fact that Agenda 2007 comprises the European Neighbourhood Policy and look forward to the Commission’s plan for a new European Neighbourhood Instrument. Active involvement is also expected from the countries that these policies are aimed at. Ukraine has set a good example, expressing a clear wish for a more intensive level of partnership with the European Union.
Developing relations with new neighbours is the endeavour where the historical experience and the know-how of new Member States are particularly useful. Estonia already has substantial experience with carrying out bilateral development cooperation with several countries, Ukraine and Georgia in particular. We also expect to intensify our contacts with Moldova. Georgia has demonstrated its commitment to national renewal, and this principled political approach must be supported in every way possible. Estonian Government has adopted an extensive action plan for assisting Georgia.
Estonia is prepared to continue supporting these and other countries in their endeavours to carry out democratic and market economy reforms. Our contribution could be particularly valuable in the Information and Communication Technologies sector, as well as in the sphere of e-government. This is where Estonia itself has been rather successful in adopting new technologies and introducing reforms.
We must also be ever more prepared to contribute to the assisting of poorer states and the easing of humanitarian crises. Step-by-step, we are finding ways to increase the amount of resources devoted to development co-operation and move closer to the EU Member States’ level.
Ladies and gentlemen,
Of particular importance are the relations and cooperation between the European Union and Russia. The European Council on 12 December 2003 reaffirmed the Union’s determination to build a balanced and reciprocal partnership with Russia based on the rule of law, democracy, human rights and fundamental freedoms, and market economy.
However, the increasingly intensive cooperation between the European Union and Russia has not been as successful as expected, and more serious efforts are necessary. The first meeting of the Russia-European Union Permanent Partnership Council (PPC) held in Luxembourg at the Foreign Ministers level on 27 April gave hope that progress can be made. The signing of the protocol on extending the Partnership and Cooperation Agreement to new Member States was clearly a positive development. Now efforts should be directed towards the unconditional ratification of the protocol. We hope that the European Union stands united in this question and defends the interests of its Member States. We also hope that the results of the 21 May 2004 summit meeting create basis for the further development of the EU-Russian relations within the framework of the so-called Four Common Spaces.
It goes without saying that tighter economic relations between the European Union and Russia are useful and beneficial for both, although we have to bear in mind that common values and democratic standards should not be sacrificed for economic gains. The enlargement has created entirely new opportunities for European Union and Russian businesses. But so far, the European Union has not been very successful in convincing Russia that the completion of its democratic and market economy reforms is a precondition for more successful economic integration with the European Union. A more concerted approach by the member states of the Union is needed. As an important development towards successful economic integration, the European Union and Russia signed a bilateral protocol on 21 May this year on terms for Russia's entry into the World Trade Organisation (WTO).
Dear audience,
In recent years, the economic growth in the European Union has slowed down. The average GDP growth in the Member States in 2003 was below 1%. Unemployment in Europe is nearly twice as high as in the United States. This indicates the seriousness of the challenges facing Europe and should convince us all that both the global competitiveness of the European Union, as well as competition within the Union itself should be increased. This is the most reliable way of ensuring stability and long-term development of Europe’s economic environment.
Estonia has been in the forefront among the new European Union members in this respect. The bases for Estonia’s success have been its economic reforms, its liberal economy and its free trade policies with other countries. According to the World Economic Forum Global Competitiveness Report, in 2003 Estonia ranked 22nd, ahead even of seven EU Member States. In the 2004 Heritage Foundation / Wall Street Journal Index of Economic Freedom, Estonia ranks sixth.
Efficiency, increased competitiveness and sustainable economic growth are the core goals of the Lisbon strategy and Estonia completely supports these endeavours. Creating more employment in Europe, investment in human resources and life-long learning are crucial in this respect. To secure economic growth in Europe and increase its competitiveness, research and development (R&D), and scientific innovations should be prioritised even more. Increased attention has to be paid to the development of information and communication as well the so-called frontier technologies, biotechnology in particular. Estonia is among the most successful new EU members also in this respect, especially what concerns the development of Information and Communication Technologies (ICT). According to the World Economic Forum’s The Global Information Technology Report 2003-2004, for example, Estonia ranks thirteenth in the use of ICT by the Government, and third in the political and regulatory environment sub-index.
In order to revitalize the European economy, it is important that all Member States follow the conditions prescribed on their fiscal policy in the Stability and Growth Pact. Maximization of the potential of all Member States rather than suffocating it with red tape is also of particular importance. Another important condition is the free movement of labour. We hope that this will in the near future complement for all new member states the free movement of capital, goods and services in the European single market.
Ladies and gentlemen,
Estonia’s experiences with successful economic reforms have led us to support the maintaining of unanimity in taxation in the European Union decision-making process. The EU Member States have different taxation systems that have evolved in particular national and historical contexts. Tax competition is essential for enhancing the competitiveness of the Union and for achieving the Lisbon goals. Each Member State’s sovereign right to establish its tax rates for direct taxes is an important tool for this.
Estonia and other new members of the European Union have been accused of low tax rates, and Estonia in particular has been accused on having no corporate tax. These accusations are clearly erroneous and stem from domestic political debates.
Estonia is no tax paradise. The general tax burden in Estonia is of approximately the same level as in other Member States. Our taxation system is simple and transparent with few exemptions or particularities. For this it has gained recognition from international institutions such as the OECD and IMF. For an objective analysis of the level of taxation, the taxation system has to be interpreted in its integrity. Estonia has decided to lay its tax burden more on consumption and less on earnings. Estonia’s VAT is 18% - the average rate among Member States. Uniform income as well as corporate tax rates in Estonia are both 26%. The zero corporate tax only concerns reinvested profits. All distributed profits are taxed according to the general principles. I would also like to add that Estonia does not give state aid to companies through taxation measures.
Linking tax policy questions to the distribution of resources of structural funds, as suggested by some politicians, is not reasonable. The distribution of structural funds is and has to be based on the GDP of the Member States and the real needs of the state for catching up with the rest, not on the amount of tax revenues collected. Consequently, Estonian GDP growth results in greater contributions to the EU budget and, in the long term, facilitates the transformation of Estonia into a net-contributor to the EU budget.
Dear Mr Chairman,
Ladies and gentlemen,
In conclusion, I would like to stress that Estonia aims to be a constructive, active, and positively minded member of the European Union. Although the places of Estonia and Austria in the enlarged European Union are in many ways different, our vision about the future of the Union, as our successful cooperation during the recent years has proved, coincides in various important respects.
There is a lot of potential for even tighter political, economic and cultural relations between our countries. Estonia provides the investors and entrepreneurs with considerable opportunities. It is a country with untouched nature – a perfect place for ecotourism. Its coastline and islands, as well old Hanseatic cities have been praised by many. Tallinn, its capital, belongs to the UNESCO world heritage list and is one of the best preserved medieval cities in Europe. Come and see for yourselves! Welcome to Estonia!
Thank you for your attention.
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