According to the preamble to the Constitution, one of the founding principles of the Estonian state and society is liberty. At the same time, our daily life is regulated by a number of restrictions and rules.

When assessing freedom of entrepreneurship, the viewpoint – either too little or too much freedom – depends on whether someone is an entrepreneur themselves or has to put up with the effects of entrepreneurship. More taxes should also be collected primarily from someone else: our own tax burden often seems to us too heavy or even unlawful.

In a smart and progressive country that makes use of its advantages, freedoms and restrictions imposed for the benefit of all are in balance with each other. When taxes are justified and at a reasonable rate, they will be paid.

Taxes, fees and charges

Petitions on the issue of taxes received by the Chancellor during the reporting year are characterised by the keyword ‘social security’. Several people expressed dissatisfaction with the system for calculating the basic exemption entering into force on 1 January 2018. It appeared that the rigidity of the new system may in some cases worsen the situation of economically vulnerable people. The Chancellor was also asked to assess the legality of fees and charges established by local authorities and by the state (the road toll). 

A dispute in the Supreme Court over the legality of service fees for waste transport imposed by Tallinn was completed. The Supreme Court dismissed the Chancellor’s application. The dispute came to an end but several issues need further debate. 

The basic exemption 

The Chancellor was contacted by a petitioner who was dissatisfied that a redundancy payment received by them at the end of the year significantly reduced the amount of their basic exemption. A redundancy payment increases a person’s annual income and may consequently increase the amount of income tax payable. At the same time, the regular income of someone made redundant may be disrupted for a long time and, in that situation, increased tax liability due to a redundancy payment certainly feels unfair. 

A pregnant woman receiving maternity benefit at the end of the year may find herself in a similar situation. She would simultaneously receive several months’ income while after that her regular income discontinues for a while since the state can begin paying parental benefit to her only after the end of the pregnancy leave and maternity leave. 

The current procedure for payment of sickness benefit does not enable payment of maternity benefit by instalments. Since income tax accounting is cash-based (i.e. taxation is based on when the money was received and not the period for which the money was paid) then retroactive as well as advance payments affect the amount of taxable income during the taxation period when the income was received. A solution might be not to pay all maternity benefit in advance. The situation could also be resolved if certain benefits were to be excluded from income affecting the amount of the basic exemption. 

The Chancellor replied to the petitioners that changing the tax system is within the competence of the Riigikogu. 

The amount of basic exemption may also be significantly affected by support received from the Kredex foundation. Kredex pays various types of support related to purchase and reconstruction of housing both to apartment associations as well as private individuals. Private individuals may, for example, apply for home support for families with many children, for private home renovation support, for support to upgrade the heating systems in private homes, and so forth. Support is paid from state budget allocations, i.e. this is all state support. 

Income tax is withheld from support paid to private individuals and payment of support may, in turn, affect the amount of someone’s taxable income. However, apartment owners receiving support for improving living conditions through apartment associations do not find themselves in the same situation. Differences in taxation of legal persons may be offered as justification for different treatment. However, as a rule, justification applicable to taxation of income of legal persons – i.e. taxation is deferred until the moment of withdrawal of profits – cannot be applied to an apartment association. 

An apartment association is an association incurring expenses in the joint interests of apartment owners (an expense association) and, essentially, there is no difference whether support intended for renovation of housing, or the like, is paid to an apartment association or directly to a private individual. Several very similar types of support are tax-exempt, e.g. support paid from European Union structural funds for construction of water and sewage piping or storage tanks. Support for similar purposes is taxed differently depending on the source of financing.

Tax policy should be based on justified and understandable choices. In a memorandum sent to the Riigikogu Finance Committee, the Chancellor drew attention to contradictions in taxing Kredex support. The Chancellor noted that if, as a rule, support laid down by law is tax-exempt, and the underlying idea for this is tax exemption of a social type of benefits, then support paid by Kredex is also often of a social type. The different types of support are aimed, inter alia, at improving people’s living conditions and increasing the energy efficiency of housing. 

For example, Kredex support for families with many children is paid to low-income families who also lack housing in line with their needs or whose existing housing fails to meet the basic conditions: there is no water and sewage system or no washing facilities, the roof is leaking or the heating stoves are working poorly. If, for example, the maximum amount of that support is paid to someone whose annual income is up to 14 000 euros and whose annual basic exemption would be 6000 euros without the support, then their annual income increases so much that based on their tax return they would have to pay 1200 euros extra income tax. At the same time, despite having received the support, a person’s ability to pay need not have improved as Kredex support is for compensating expenses. As a result, Kredex support and the resulting increased tax liability might even worsen the everyday ability to cope of a low-income family with many children. A possible solution would be to exempt Kredex support from income tax or exclude it from income against which the basic exemption is calculated. 

The Chancellor also drew the attention of the Riigikogu Finance Committee and the Social Affairs Committee to the fact that if a survivor’s pension is paid to child, the increased basic exemption to which parent or guardian is entitled for children is accordingly reduced.

A parent or guardian maintaining at least two minor children may, as of the second child, deduct from their taxable income an additional 1848 euros a year for each child up to 17 years old. In that case, a rule applies that receipt of taxable income by a child reduces the sum that the parent may deduct from their income for that child. 

The idea of reducing the tax exemption is that a child who works or has other income declares the income themselves (or a representative does so on their behalf) and they may use the general basic exemption. Children who have lost their parents receive a survivor’s pension which is a child’s income. In connection with the entry into force of the new tax system, a separate basic exemption for pensions no longer exists and survivor’s pension is deemed to be income included in the calculation for the general basic exemption. 

Receipt of a survivor’s pension by a child reduces the amount of additional basic exemption for children which a parent may deduct from their own income. This places children who have lost their parents in a worse situation than other families as in no other cases does money intended for maintaining a child (e.g. child maintenance paid to the other parent by a divorced parent living separately) reduce the amount of additional basic exemption for a child. 

The situation could not be foreseen when introducing the system of graded basic exemption. The Ministry of Finance immediately offered a solution as to how to amend the law. The Social Affairs Committee discussed the memorandum and supported the amendment under which survivor’s pension would no longer affect the right to deduct additional basic exemption. The Finance Committee also supported preparing an amendment to the basic exemption. At the time of drawing up the report, the relevant Draft Act was at the approval stage.

The Chancellor was asked for an explanation by pensioners dissatisfied with abolition of additional basic exemption for pensions. Mostly, the Chancellor was contacted by people receiving a pension from abroad whose basic exemption is calculated on the basis of income obtained by adding together the Estonian and foreign pension. Even if a foreign pension is not taxed in Estonia, this is considered double taxation. Which country may tax a pension depends on tax agreements concluded between countries, and often also depends on the type of pension. 

Use of data in appendix to value added tax return

The Chancellor received a complaint that information on invoices in the value of a thousand or more euros declared in an appendix to a value added tax return had been used for a different purpose than had originally been promised. 

When establishing the obligation to declare invoices in the value of a thousand or more euros, undertakings were promised that data would only be collected for the purpose of verifying payment of taxes. In actuality, the invoice data was also used to carry out a study commissioned by the Foresight Centre. Researchers carrying out the study gained access to the data through Statistics Estonia. 

Statistics Estonia is entitled to receive information containing tax secrets to perform tasks laid down under the Official Statistics Act. However, it was found that Statistics Estonia may also request information containing tax secrets for the purpose of statistical work carried out on commission by a private individual or organisation, not just for purposes of national statistics. 

Although the data were processed so that identifying a specific undertaking and revealing business secrets was ruled out, this broke the promises given to undertakings when debating the Draft Act as to the purposes for collecting and using the data for commissioned work. 

In a memorandum sent to the Tax and Customs Board and Statistics Estonia, the Chancellor noted that going back on promises undermines trust in the state and is incompatible with the principles of good administrative practice. This also applies to promises not written into the law.

​​​​​​​Road toll 

Under the Traffic Act, road toll is payable for a truck and its trailer with a maximum mass of over 3500 kilograms for using a public road. Confusion has been caused by the definition of the object of road toll, i.e. a truck. Under the Act, a truck is defined as a motor vehicle designated for carrying cargo; that definition also exists in European Union legislation on road charging. 

However, payment of road toll has also been demanded in respect of vehicles not designated for carrying cargo, such as cranes and tow trucks. Such erroneous practice arises from explanations by the Ministry of Economic Affairs and Communications ‒ which drafted the road toll rules ‒ i.e. explanations that were incompatible with the law and the principle of legal clarity. The regulatory provisions on road toll are themselves not problematic. However, interpretations of the law must comply with the Act and European Union law and explanations should not be misleading.

European Union rules also do not allow member states to expand the definition of a road charge. A member state may lay down reduced rates or exempt some trucks from the duty to pay a road charge but the state may not treat as trucks vehicles not designated and not used for carriage of goods. 

​​​​​​​Reduction of renewable energy support

Under the Electricity Market Act, renewable energy producers are entitled to receive support. The aim is to motivate use of new and environmentally sustainable generation capacities. 

For a long time, a fixed rate had been laid down by law for renewable energy support. This meant that all renewable energy generated had to be paid for, regardless of whether Estonia has already attained the aim of the support scheme. The support scheme was changed and support at a fixed rate was abolished. In future, the rate of support will be determined at a reverse auction which is probably more favourable for consumers. 

The Chancellor found that the changes were lawful and also took into account the legitimate expectations of producers. Producers having qualified for support under the previous support scheme will continue to receive support until the end of the 12-year support period. Producers of renewable energy should have been aware of European Union state aid rules and could not expect that renewable energy support would continue to be paid under the same conditions. 

​​​​​​​Waste transport fee in Tallinn

On 10 May 2018, the Chancellor lodged an application with the Supreme Court to annul sentences 1 and 2 of § 351 in Tallinn’s waste management regulations, under which the competence to lay down the procedure for setting the fee was conferred on Tallinn City Government, and a public service fee was also imposed on waste holders to cover expenses related to maintaining the register of waste holders and settling accounts with waste holders. 

§ 66(11) of the Waste Act, enabling transport of municipal waste to be organised through the intermediation of a local authority, was in force to 6 January 2015. Under that scheme, the waste holder’s only client was the city or rural municipality that kept records of waste holders and also settled accounts with them. Under the effect of transition provisions (Waste Act § 1366 and 1368), waste transport is still organised in the same way in some local authorities, including several waste transport areas in Tallinn (e.g. Haabersti, North-Tallinn, Mustamäe, Lasnamäe). 

Tallinn City added to the fee charged for waste transport and waste management an additional fee receivable by the city budget for keeping the register of waste holders and settling accounts with waste holders. 

Such a fee is a public financial obligation that may be laid down only on the basis of a sufficiently clear delegating norm arising from law. The implementing provisions of the Waste Act regulate only completion of ongoing public tenders and the validity of existing contracts until their expiry. Thus, these provisions do not give rise to the right to charge a fee for keeping a register and settling accounts with waste transporters. Nor, in the Chancellor’s assessment, can that basis be deduced from the provisions regulating development of a waste transport fee upon implementation of the so-called classic waste transport model (§ 66(4)−(6) Waste Act) when it is not necessary to lay down the maximum fee rate or more detailed grounds for developing the fee rate. In that case, development of the price for the service is regulated by competition. 

A public financial obligation may be imposed on the basis of objective criteria laid down by law if the extent of the obligation is predictable and equal treatment of persons is ensured. Neither the Waste Act nor any other Act regulates charging the fee, the minimum or maximum rate of the fee, nor do they define a basis for setting the amount of the fee. Waste transport fees had been laid down by a decree of the head of the Tallinn Environmental Board, even though the law provides no basis for such delegation. Tallinn City Council has also not determined how the Environmental Board should calculate the amount of the fee. The grounds for development of the fee were vague and intransparent, so that waste holders cannot sufficiently predict the amount of the fee for waste transport.

The Supreme Court dismissed the Chancellor’s application, finding that the legal basis for charging the fee derives from § 1366 and 1368 of the Waste Act (transition provisions) in combination with § 66(4)−(6) of the Waste Act. Since a local authority may provide a waste transport service, until the expiry of the contracts mentioned in the transition provision, in the manner described in § 66(11) of the Waste Act, it may also charge a waste transport fee for that service. The law requires a waste transport fee to cover the costs related to transport of waste and preparation for transport. Costs of settling accounts with waste holders and keeping records of waste holders can be considered as costs related to transport and preparation of transport ‒ i.e. costs that should be compensated by the waste holder, regardless of who provides them with the specific service. 

Surprisingly, the court noted that in this case the Chancellor had not contested the constitutionality of the legal basis for laying down the waste transport fee. Indeed, the Chancellor contested the provisions of the Tallinn waste management regulations as she found that the city had no legal basis to charge a waste transport fee for keeping records of waste holders and settling accounts with them. The Chancellor considered it possible to charge a fee for transport and subsequent handling of waste, following the polluter pays principle. Moreover, the price of transport and handling of waste develops in conditions of public competition, i.e. it cannot be set by a decision. 

The Chancellor could not lodge an application seeking a declaration of the unconstitutionality of the legal basis for costs of settling accounts and keeping the register as no relevant provision exists in the legal order. However, the Chancellor’s application noted that even if a legal basis exists for imposing the fee, it might not be constitutional as the law does not establish a maximum or minimum rate threshold. However, the court, having established the existence of a legal basis, did not consider it necessary to verify its constitutionality. 

The court agreed with the Chancellor that covering the costs of keeping the register of waste holders is, by law, the task of a local authority, so that costs related to keeping the register should be covered by the local authority. However, the court found that Tallinn waste management regulations could be interpreted in a constitutionally-compliant manner. With that in mind, the court relied on explanations by Tallinn City that the costs of keeping the register are actually costs related to settling accounts with waste holders and keeping records of them, and not the costs of developing the register. The court found that the concept of a register has been used in the Waste Act in a different meaning from the waste management regulations, which may lead to confusion and also raise the issue of transparency of formation of the waste transport fee. 

However, in earlier case-law, a different opinion regarding public fees has been expressed (the basis for charging a fee must be laid down with sufficient clarity, including the maximum fee rate or the principles of fee formation, and the predictability of the fee rate). The risk that the fee charged from a waste user is excessive has actually become a reality in the case of Tallinn, according to an assessment by an agency sufficiently competent to assess that issue. 

According to an assessment by the Estonian Competition Authority, a charge for keeping the register and settling accounts which had been added to the costs of transporting and handling waste in Tallinn City had been economically unjustifiably excessive, making up almost 40% of the waste transport fee. The Competition Authority had a court dispute with Tallinn City and the West-Viru County Waste Centre, a non-profit association, concerning the issue of the waste transport fee. On 25 April 2019, the Supreme Court issued judgment in case No 3-16-1267/49 (Non-profit association West-Viru County Waste Centre v. the Competition Authority) and found that keeping records of waste holders and settling accounts with them constitutes activity related to exercise of public authority, to which the Competition Act does not apply and in respect of which, accordingly, no legal basis exists for the Competition Authority to exercise supervision.

The court noted in conclusion: “Despite the lack of supervisory competence by the Competition Authority, in the case of waste transport organised on the basis of § 66(11) of the Waste Act the amount of waste transport fees is verifiable. Since the waste transport fee set by a local authority or by a non-profit association authorised by it is a public financial obligation (Supreme Court Constitutional Review Chamber judgment in case No 3-4-1-34-14, para. 38), every waste holder may contest the obligation imposed on them in court if they find its amount to be disproportionate.” 

However, it is doubtful that a consumer is able to effectively protect themselves against an excessive fee if it is even unclear in comparison to what a consumer might say that the waste transport fee is too high. In order to contest the amount of the fee, it is necessary to calculate the volume-based cost of transporting waste as well as the weight-based cost of handling, and determine the volume and weight of waste of the particular consumer, and compare the correspondence of costs incurred to that effect to the real costs. In the case of small-volume waste transport, the majority of costs consist of transport, and the minority of handling. In addition, the share of other costs (e.g. settling accounts) incurred by a local authority should be assessed, as well as the justifiability of those costs with regard to a particular consumer. 

In sum, it follows from the Supreme Court’s latest decisions that the law no longer protects individuals against disproportionate public financial obligations; setting the maximum threshold of a financial obligation by law is no longer required and no agency is able to help ensure the balance – it is left for waste holders themselves to enter into a dispute to establish an adequate threshold. 

​​​​​​​Basic fee for water in Loksa Town laid down without legal basis

The Chancellor made a proposal to Loksa Town to bring the price regulation for water services into line with the Constitution. The Council of Loksa Town had stipulated in its regulation  that a client connected to the public water supply and sewerage system of Loksa town pays to the water undertaking a basic fee approved by the Government of Loksa Town on a proposal by the water undertaking. 

A local authority cannot regulate price formation by a legislative act of general application. Price formation for water services is laid down in § 141 and § 142 of the Public Water Supply and Sewerage Act under which a water undertaking sets the price after it has obtained approval for its application to set the price. 

If the licensed territory of a water undertaking is situated in a waste water collection area with a pollution load of 2000 population equivalent or more, the water undertaking must obtain approval from the Competition Authority for its price application. Loksa Town is a waste water collection area with such a pollution load, so that approval from the Competition Authority must be obtained for the price of water services (including changing the price structure and setting a basic fee). 

No law entitles the municipal council to set the price of water, so that Loksa town had set the basic fee without a legal basis under the law. The Council of Loksa Town complied with the Chancellor’s proposal and changed the regulation

​​​​​​​Late interest on recovered agricultural support 

The Riigikogu resolved a problem described in an earlier memorandum from the Chancellor regarding the rate of late interest claimed on recovered agricultural support. 

The rate of late interest (0.1% daily, 36.5% annually) laid down in the European Union Common Agricultural Policy Implementation Act was fairly high, so that persons could find themselves in an economically difficult situation if unable to repay the support by the deadline. The agency reclaiming the support is also not entitled to reduce or cancel the interest, and no maximum limit for interest is set.

The Riigikogu adopted a legislative amendment laying down that in the event of deferral of repayment of the support the debtor will only have to pay late interest (6 months’ EURIBOR plus 3% per annum). Additionally, the Riigikogu set the maximum rate of interest payable under the EU Common Agricultural Policy Implementation Act and several other Acts regulating payment and recovery of support (the 2014-2020 Structural Assistance Act, the Fisheries Market Organisation Act). Under the new regulatory provisions, late interest can only be the maximum amount of the repayable sum of support based on which late interest is calculated. The amendments entered into force on 1 January 2019. 

​​​​​​​Public space and construction

Under § 32 of the Constitution, property is inviolable and protected. Nevertheless, the right to property may be circumscribed or restricted in cases provided by law and in the public interest to protect the living environment. This does not mean that all restrictions on property should be listed in detail and exhaustively in the law. Restrictions on property imposed by an administrative act are also lawful if based on a law. However, this does not mean that any restriction on property laid down by law is constitutional. Every restriction must have a legitimate and reasonable purpose. In its absence, a restriction is unconstitutional. 

​​​​​​​Comprehensive plan and building regulation

Restrictions on immovable property may also be imposed by a comprehensive plan. A comprehensive plan may lay down conditions and restrictions on use of property. For example, designating an area as part of a green network and restricting construction of new buildings there. A comprehensive plan may also lay down requirements for the size of plots or prescribe that district heating must be used to provide heating to buildings.

Under the Planning Act in force since 1 July 2015, building and land use conditions must be laid down by a comprehensive plan and not by a local authority regulation. The procedure for establishing a comprehensive plan differs considerably from the procedure for adopting a regulation. For example, in the process of drawing up a plan anyone interested may make proposals which the body establishing the plan must take into account. If the body decides to disregard the proposals, they must provide justification for doing so. However, a regulation may be adopted, in principle, without involving anyone, and contesting a regulation is fairly complicated. 

Rural municipalities and cities had to review their building regulations and bring them into line with the law by 1 July 2017. The majority of them have done so. However, the Chancellor made a proposal to Tallinn city to annul the building regulations of Astangu, Pelgulinn and Nõmme city districts since they dealt with issues to be resolved by a comprehensive plan. Following the Chancellor’s proposal, Tallinn annulled the building regulations of those city districts. The Chancellor sent a similar memorandum to Haapsalu town where an outdated building regulation was also in force. By now, Haapsalu has also annulled its building regulations.

The choice of the right procedure is also essential in resolving issues regarding a district heating area. Under the law, rural municipalities and cities may designate a district heating area, i.e. an area within whose boundaries the main source of heat supply must be district heating. Many rural municipalities and cities have established a district heating area and related conditions by a regulation even though by law this should be done by a comprehensive plan. Such erroneous practice is due to lack of legal clarity in the provisions of the District Heating Act. The Chancellor drew attention to this already during the previous reporting year. Hopefully, the new Riigikogu elected in March 2019 will begin to resolve this problem at the first opportunity. 

​​​​​​​Development plan on organisation of parking

In 2006, Tallinn City Council adopted a “Development plan on organisation of parking for 2006–2014”, Chapter 4 (“Parking standard”) of which laid down the principles for calculating the number of parking places prescribed for newly designed buildings. The Chancellor’s attention was drawn to the fact that the Tallinn authorities still narrowly proceed from the provisions of that development plan and do not wish to familiarise themselves with the needs and nature of specific buildings. 

The Chancellor noted that a development plan constitutes internal rules laid down for an administrative authority itself, which may be followed, but this should not rule out consideration of other essential facts and justified interests. Also, the development plan was drawn up as long as 13 years ago, so that the parking standard laid down in the development plan which is no longer in force might no longer be relevant and compatible with currently effective development documents.

​​​​​​​Right to compensation for tolerating a utility network on residential land

Often, the central issue regarding restrictions on the right to property is whether restrictions should entitle the owner to compensation. The Constitution does not require every restriction on property to be compensated. For example, amendments to the Law of Property Act Implementation Act entering into force on 1 January 2019 do not provide for payment of a so-called toleration compensation for utility networks located on residential land. 

The Chancellor found that such an amendment in this particular case was lawful. The aim of a ‘toleration’ payment is to compensate for a situation where the owner can no longer use their property for its intended purpose. Normally, utility networks located on residential land do not result in the kinds of restrictions that would extensively curtail the land owner’s rights. A utility network is mostly also necessary for servicing the buildings on an immovable. 

​​​​​​​Restrictions on property arising from heritage conservation

The Heritage Conservation Act, in force from 1 May 2019, attracted considerable attention. Implementation of the Heritage Conservation Act also entails restrictions on property that proceed from general interests. Both in connection with the previous Heritage Conservation Act as well as the new one, people have felt impelled to contact the Chancellor mostly with the issue of proportionality of restrictions on property. In connection with the entry into force of the new Act, it was also necessary to explain that the statutes of heritage conservation areas established in the form of regulations under the repealed Heritage Conservation Act are substantively administrative acts and remain in force until amended or annulled.

Implementing heritage conservation-related restrictions depends on individual decisions: for example, establishing a heritage protection area, taking an individual site or object under protection, or issuing authorisation for work. In doing so, whether the restrictions to be imposed are necessary, appropriate and proportional in the narrow sense should be considered on a case-by-case basis. The Act does not preclude making constitutionally compatible decisions in the process of its implementation. 

Proportionality of restrictions can be achieved in different ways: both by easing or removing the restrictions, or by paying compensation and targeted support. Although year-by-year the state has increased the budget earmarked for support to owners of immovables for compliance with heritage conservation requirements, the needs exceed the possibilities, which naturally causes dissatisfaction among owners. Therefore, the Chancellor drew the attention of the Riigikogu Cultural Affairs Committee to the need to revise the grounds for relief of an immovable from heritage conservation. In some cases, it is not feasible to keep a building under protection, in particular if the building is in poor shape and its restoration is expensive and hopeless in view of the special heritage conservation conditions. In that case, it is probable that the building would fall apart over a longer period. Thus, whether continued restriction of the right to property is always justified should be considered − in some cases, it might be feasible to lift the protection of a building as a heritage site. Protection of cultural heritage should also take into account the public interest − such as the need to ensure safety − in addition to the rights of owners.

Not all restrictions, including heritage conservation-related restrictions, necessarily require payment of support or compensation. Absence of compensation or support does not render a restriction unlawful; however, imposition of a particularly intense restriction may trigger entitlement to claim compensation. Support paid by the state derives primarily from the understanding that cultural heritage would not be preserved without it. 

​​​​​​​The requirement for fire compartmentation of a building

Under the Minister of the Interior regulation establishing fire safety requirements for buildings, fire compartments must be created in buildings and, where necessary, a fire door should be installed to parts of an apartment building used separately (e.g. basements). This requirement applies to all residential houses in use. Some old houses therefore need to be rebuilt, even if the house meets the requirements in force at the time of construction. 

The Chancellor explained that the requirement has been in force for a longer time and cannot be considered excessively burdensome or disproportionate. In the event of fire, people must also be able to get out of an old house.

​​​​​​​Constitutionality of the regulatory framework for a national designated spatial plan

Under the Planning Act, in certain cases the national Government may initiate and establish a national designated spatial plan. This precludes the planning competence of local authorities – a national designated spatial plan is processed by a government agency designated by the Government and a local authority is involved in the process on the same basis as all other interested parties. Also, plans established by a local authority must give way to a national designated spatial plan.

In the course of constitutional review proceedings initiated by Tartu City, the Chancellor had to assess whether the provisions of the Planning Act define the case of a national designated spatial plan with sufficient clarity and whether it is lawful for the costs of proceedings for a national designated spatial plan to be borne by an interested person. The Supreme Court found that the provisions of the Planning Act on a national designated spatial plan were constitutional. 

​​​​​​​Land and forest

​​​​​​​Valuable arable land 

During the reporting year, the Riigikogu debated a Draft Act envisaging extensive restrictions for protection of valuable arable land. The Draft Act obliged the owner of agricultural land to continue agricultural use of the land. For example, a road, well or shed could have been built or trees planted on that land only in exceptional cases with authorisation from the Agricultural Board. 

The Chancellor drew attention to the fact that the approach adopted in the Draft Act would turn an owner into a state tool, a means to achieve a purpose. However, this is not compatible with a social order based on liberty (see the preamble to the Constitution) where fundamental rights may only be circumscribed to the minimum extent and circumscription may not distort the nature of the rights and freedoms circumscribed (§ 11 Constitution). Where the desired aim can be achieved in a different manner that is less restrictive of fundamental rights, the restriction is not necessary. An unnecessary restriction is unconstitutional.

Certainly, fields need to be protected. Residential and other buildings need not be built on a field which, moreover, constitutes a limited resource in terms of food production. However, measures taken to protect fields, including restrictions, have to be constitutional.

Protection of valuable arable land is laid down by the Planning Act (§ 75(1) clause 14). A person can express their interests and needs during the planning procedure, and a local authority must find a balance between different interests and values in an open procedure. Thus, restrictions for protection of agricultural land have also been imposed in current plans, and no reason exists to consider the Planning Act as defective in this regard.

Should the Riigikogu find that agricultural land is in need of better protection, the law should define the concept of valuable agricultural land. For the rest, the current Planning Act, whose provisions can and should be implemented where relevant, is sufficient for protecting fields. 

Restrictions on the rights of land owners and local authorities suggested in the Draft Act are excessive. The Draft Act disappeared from the Riigikogu proceedings.

​​​​​​​Changing the basic data in the land cadastre 

At the end of 2018, the Land Board changed the areas of cadastral units and updated land parcels based on land cover and land use type. Many land owners could not understand why the area of their registered immovable decreased, the boundary point coordinates changed, and how the state could change the data of land owned by private persons at all without notifying the owners.

The basis for changing the data concerning land cover and land use type of cadastral units is § 131 of the Land Cadastre Act according to which a cadastral land cover and use type map is the cadastral map. A parcel based on land cover and land use type means part of a cadastral unit which has the same economic use and/or natural status and which shows the actual natural status of land. Based on the cadastral land cover and land use type map, areas of parcels based on land cover and land use type of cadastral units are calculated at least once a year. Where that calculation results in changes to parcels based on the land cover and land use type of a cadastral unit or in changes to their size, this is due to changes in the natural status of the land unit. Data on the natural status of land is collected every year through aerial surveys. 

Marking land cover and land use type on the map should not, in itself, impose any restrictions on property. A restriction cannot be based on an administrative measure (such as marking land cover and land use type on a map) but there has to be a law (e.g. the Nature Conservation Act) or an appealable administrative act (e.g. a plan) issued on the basis of a law. Confusion is caused by the principles and the legal bases for determining land cover and land use type and the possibilities to contest the measure. An erroneous record may result in interference with a person’s rights, such as higher land tax, building restrictions, or the like. It is not clear when the land cover and land use type of a parcel is marked as natural grassland and when it is an area under cultivation. That is, many parcels whose land use type is marked as land under cultivation have for a long time been in use as permanent grassland, which it is not practicable for farmers to cultivate but to maintain as grassland motivated by conditions for support from the Agricultural Registers and Information Board. However, land tax is payable for a parcel marked as an area under cultivation. 

To date, it is unclear on what basis the land cover and land use type of some residential land is categorized as forest land. Forest land is characterised by woody plants meeting specific parameters (Forest Act § 3(2) clause 2). Under the Forest Act, forest is an ecosystem consisting of forest land and its flora and fauna. The definition of forest land is provided by the Forest Act. No other definition of a forest land parcel based on land cover and land use type (e.g. clear cut area, young growth) set out in the Minister of the Environment regulation shows the natural status of land as forest but proceeds from the economic use of forest land (silviculture). 

However, under § 3(3) of the Forest Act, a parcel has no economic purpose if located on residential land and designated as forest land. This means that if trees growing bigger year by year on a residential plot are suddenly deemed as forest based on aerial photography taken by the Land Board, along with all the consequent restrictions, this is misguided. It is also odd that land owners themselves are not notified of these changes. In certain cases, wrongly marking forest land as located on residential land may result in significant restrictions on property. For example, under § 23(1) clause 1 of the Lahemaa National Park protection regulations, erecting buildings on forest land located in a limited management zone in the park is prohibited.

Within the area of administration of the Ministry of the Environment, matters concerning parcels located on residential land while designated as forest land have to be clarified and, if necessary, the rules brought into line with each other. What parameters woody plants growing on residential land should meet in order to be deemed as forest should be clear for people. 

​​​​​​​Planning and organising construction on state land

The Chancellor drew the attention of the Minister of the Environment to the fact that the state’s activities must be consistent and proceed from the wishes and aims of the people contacting the state. 

A striking example is a case concerning a harbour on Hiiumaa Island. The creator of the harbour complained to the Chancellor that they could not use the breakwaters that they built themselves because, over a period of ten years, the state had not given them the land use right to use the boat harbour. This had happened regardless of the fact that the state was aware of the building of the harbour, that the Ministry of the Environment had given the necessary permit for this, and the harbour was planned and built under legislation in force. The state has thereby placed the person in an unacceptable and odd situation: they are allowed to build breakwaters attached to state land, but cannot use the land for the intended purpose because the state has still not given the right to use the shoreside land.

The Chancellor found that such conduct by the state contravenes the principles of good administrative practice. Resolving the application by the builder of the port has been delayed for an unacceptably long time and contradictory explanations have been given to them. However, failures in inter-agency cooperation may not cause financial damage to someone or violate people’s rights.

​​​​​​​Implementation of rule ensuring nesting peace for birds

The Chancellor was asked to assess whether existing rules are sufficient to implement § 55(61) (ensuring nesting peace) of the Nature Conservation Act

The prohibition laid down in § 55(61) of the Nature Conservation Act must be observed by those undertaking work in a forest and it should also be taken into account by the state when authorising an activity. Although the existence or absence of nests is assessed directly by the person carrying out forest work, environmental officials must also have a good overview of the probable nesting preferences of birds in each forest stand and of the impact that different types of cutting have on birds during nesting. Assessment of the impact of forest cutting on birds should be based on scientific research and, where necessary, proportionate conditions should be set for a forest notification to ensure a reasonable balance between the interests of forest owners and nature conservation. When planning cutting work, the executive authorities cannot disregard the prohibition laid down in § 55(61) of the Nature Conservation Act nor can they leave the impact of cutting on the nesting peace of birds unassessed. Nor can the executive place the whole responsibility on those carrying out work in the forest.

According to the Chancellor’s assessment, the Environmental Board may impose additional conditions on forest notifications (including temporal restrictions) intended for cutting forest during the nesting period of birds. Thus, the existing rules are sufficient to ensure the nesting peace of birds.

​​​​​​​Decision to initiate establishment of a nature reserve

The law does not prescribe how quickly steps should be taken to include an area under nature conservation. Nor does the law lay down a deadline for how quickly the state should form a position of principle on establishing a nature reserve. At the same time, the speed of deciding significantly impacts on the rights of a land owner to use their land. For example, for the time of the relevant proceedings the state may suspend the validity of forest notifications and building permits, and economic activities or even movement of people in the area may be restricted upon establishing a nature reserve.

A proposal to establish Sõrve nature reserve was made in 2006 but at the beginning of 2019 the state had still not formed a position on initiating establishment of the nature reserve. 

The Chancellor found that 13 years is an unreasonably long period to reach a decision involving such considerable restrictions. On that basis, the Chancellor recommended that the Minister of the Environment should reach a decision on Sõrve nature reserve as quickly as possible. On 16 April 2019, a decision was made. 

​​​​​​​Diffuse pollution 

The Chancellor was contacted with a request for assistance by the owners of a house in the middle of fields who had discovered that the water in their well was contaminated with nitrates. The source of the pollution is unknown but the water in the well is no longer drinkable and the inhabitants must bring drinking water from a distance of several kilometres. 

The issue is how the responsible agencies can identify the probable source of contamination and who can do what to compensate damage. 

Environmental officials have several possibilities to resolve the concern related to water pollution, and the Chancellor also sent a recommendation on this. It may be a case where resolution may require applying the Environmental Liability Act or the Water Act. The choice of Act depends on the extent of pollution. 

However, it is incompatible with the principles of good administrative practice if agencies are aware of contaminated well water for several years but refuse to apply the relevant legal norms to resolve people’s concern.