Kent Mārjamaa: Construction cannot be blocked due to refusal to legalize development tax

Lawyer Kent Mārjamaa has published an opinion piece challenging the claim that the government's refusal to introduce a development tax will inevitably stop construction. He reminds that the Supreme Court clarified a year ago the conditions under which a municipality can demand funds from developers for social infrastructure such as kindergartens and schools. This is only permissible if there is a compelling budgetary necessity, demonstrated through a detailed analysis proving a sudden population increase and insufficient existing infrastructure.

Mārjamaa criticizes the practice of Tallinn and the so-called "golden ring" municipalities, which have effectively introduced an illegal tax by demanding payments per housing unit or gross floor area. He points out that the Chancellor of Justice and the Supreme Court have already confirmed that municipalities have no right to impose taxes on their own without legal basis. Paradoxically, the municipalities most eager to introduce this tax are the wealthiest ones, which would have the hardest time proving they truly lack funds.

Developers support the tax because it would create clear and equal rules, rather than depending on each municipality's discretion. In the current situation, where payments are demanded through individual decisions, inequality, lack of transparency, and a risk of corruption arise. The lawyer emphasizes that a municipality can legally refuse to approve a plan only if it is proven that the lack of social infrastructure would cause serious negative consequences that directly hinder the implementation of that specific project. In a state governed by the rule of law, a new tax cannot be introduced simply because local governments have turned an illegal practice into a standard procedure and now want to legalize it retroactively.