April 8, 2015 / 10:31 AM / 4 years ago

Estonia's new ruling coalition agrees tax cuts, more welfare payouts

TALLINN, April 8 (Reuters) - Estonia’s new three-party coalition has agreed to cut income tax, raise the tax-free threshold on wages and increase child support benefits after weeks of talks over issues including fiscal policy and the allocation of ministrial portfolios.

Income tax will be cut to 32 percent from 33 percent and the tax-free threshold on salaries will rise to 205 euros per month from 154 euros. Fines for tax avoidance will be increased.

The finance ministry said in its last economic forecast in September that it was aiming for a public sector budget surplus of 0.2 percent of gross domestic product in 2015.

The Reform Party of Prime Minister Taavi Roivas, the Social Democrats, and the Union of Pro Patria and Res Publica (IRL) won 59 seats of 101 parliament seats in the March 1 elections.

The new government said the Reform party will keep the posts of prime minister and foreign minister, the finance minister would come from the IRL and the defence minister portfolio remained with the Social Democrats.

The government is expected to take the oath of office before parliament on Thursday. (Reporting by David Mardiste; Editing by Louise Ireland)

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