Estonia currently has only a land tax, which means property taxes are the lowest in the European Union.

Aet Ader, president of the Estonian Association of Architects, said the problem lies in abandoned and unused empty buildings in Estonia's larger cities. Many are also in a state of disrepair.

"If we have plots in Tallinn, Tartu, Pärnu — in the larger cities, especially in city centers — that are sitting fallow, then in the midst of a housing crisis or for some other reason, whether for building a kindergarten or fulfilling some other vital function, it's a real loss if those plots cannot be used," she said.

The architect stressed that any policy must be based on the actual value of the property.

"It is very important that this property tax should be tied to the real value of the property. I do not see pressure points in rural areas, because unfortunately, Estonia is highly centralized around the capital, and I do not know what would happen if we started taxing those farms that are already worth many times less," she added.

Ader said a person's home should be exempt from tax and even second dwellings, such as a summer house.

"But beyond that, it seems very reasonable to start taxing additional properties. And certainly with the distinction that property on Toompea versus somewhere in Ida-Viru County is worth vastly different amounts. We need a very clear and transparent system for this," she said.

SDE: Focus on luxury real estate

At the beginning of the month, Lithuania revised its property tax system, introducing a tax of up to 5 percent on abandoned real estate. The country also implemented progressive taxes on residential property valued at €50,000 or more.

Social Democrat Tanel Kiik, a member of the Riigikogu's opposition, said Estonia could do something similar.

"We support the idea that luxury real estate — luxury goods in general — should be taxed more. A large share of assets is concentrated in the hands of a small group of people; specifically, 10 percent of the population owns nearly 60 percent of all assets in Estonia. It would be fair for these people to contribute more to the state budget," he said.

"As for abandoned property, we need to measure nine times and cut once, to avoid ending up in a situation where we are taxing someone's grandfather's or grandmother's farm. Meanwhile, someone who owns a luxury property in the capital or Old Town would not be subject to any additional tax. From a budgetary standpoint, it's fairer if the wealthier part of society pays more than they currently do," said Kiik.

Reform: Now is not the time

Former Minister of Finance Mart Võrklaev (Reform) argued that now is not the right time to introduce a property tax.

"The only place it might be worth considering is Tallinn, where there is more high-end and commercial real estate and also wealthier businesses or individuals. But outside Tallinn? I'm afraid the burden would simply become too great for our people if, on top of the land tax, we added a separate property tax," he said.

"And regarding abandoned property… I don't think tax policy is the best tool to address this. The real issue has been that residential land is 100 percent exempt from land tax. If a municipality doesn't dare to charge for it themselves, then there's no point in expecting the state to step in. Municipalities already have the ability to influence tax policy locally, and I believe local knowledge of the problem and using tax policy to address it is better than trying to manage it from Toompea," Võrklaev added.

The last time Statistics Estonia studied the country's vacant dwellings was five years ago. At that time, it was revealed that the number of uninhabited dwellings had increased fivefold over 20 years. This means that a quarter of all regular dwellings in Estonia were empty.

Both the OECD and the International Monetary Fund, which visited Estonia in the spring, have recommended that Estonia introduce property taxes, Postimees reported last month.  

At the moment, there is no analysis of whether, how much and what taxes could be introduced in Estonia and what they would bring to people, the newspaper said.

"Any such tax would have to be very carefully designed and implemented to prevent adverse effects on lower-income households," Lawrence Speer, OECD media manager, was quoted as saying.

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