v2ikesibul

Personal income is taxed at 20% and collected by the central government no matter what. Half of that is then transferred to the municipality you're registered in. Personal income tax makes up approximately half of a municipality's budget and covers far more than only transport-related expenses.

Such scheme incentivizes municipalities to compete with other municipalities and offer their residents all kinds of benefits ranging from childcare to public transport to keep them registered there.

There's no experiment and it has nothing to do with the EU. It's a local thing that didn't initially even have central goverment's backing. Public transport in Tallinn (1/3 of Estonia's population) was made free in 2013 and its expenses are covered from personal income tax from Tallinn's residents.

As to other towns and rural regions, which are poorer, the central government recently passed a measure to increase subsidies to municipalities in an amount that would allow them to make all public transport free, if they wanted. It's now up to municipalities to find a balance between fully subsidized, partially subsidized and commercial lines.

It's a matter of political will, not foreign grants. Additional subsidies that enable free public transport are 25 million EUR per year [1]. State budget for 2018 is 10 308 million EUR [2].

[1] https://www.err.ee/640797/valitsus-pole-veel-tasuta-uhistran...

[2] https://www.riigiteataja.ee/akt/129122017031

There's a single company running the routes and it's owned by the city: http://www.tallinnlt.ee/en/about-the-company/about-tallinna-...