The Cabinet began discussion on the 2014 budget yesterday, with public sector pay raises, including those for teachers and medical workers, expected to be among the more hotly debated topics.
Finance Minister Jürgen Ligi said the biggest concern is this year's meager economic growth forecast. "A higher-than-expected economic growth, which is always hoped for, is not in store. That certainly generates frustration,“ Ligi told Postimees.
"The budget options are nothing to rejoice over,“ Prime Minister Andrus Ansip told ETV. "But the lower-than-expected economic growth will not significantly affect the budget process.“
Both Ligi and Ansip said pay raises were a priority, ETV reported. "Pay raises are a goal, yes, but I would not yet shout out the percentage. The percentages discussed in the media are definitely bigger than would be feasible and wise," Ligi said.
The possibility of raising the income tax free minimum, currently at 144 euros per month, and seen as a more helpful for the lower class than reducing the income tax, is expected to be one of the main areas of discussion at the budget talks.
"In itself, raising the income free tax minimum would help domestic consumption. It is difficult to say what the right point of equilibrium is before our colleague [Ligi] has shown us what the official forecast is,“ Minister of Economic Affairs Juhan Parts said.
Earlier this year, both coalition partner IRL and the opposition proposed that the minimum be raised to 320 euros per month. More hardcore advocates called for 500 euros.
"500 euros is a goal. It is the Finnish level. We must understand it is the Finnish level and we will definitely not reach it quickly," Parts said.
Ligi added: "A 500-euro income tax free minimum would mean that the income tax would become a minority tax, and most local governments do not have their own income and their livelihood depends on the state [and the income tax]."
Talks will continue on September 5. The Cabinet will hand over its budget bill to Parliament at the beginning of October at the latest.