Finance Minister Jürgen Ligi called the 2014 draft budget "in some sense the best budget in 20 years," while the opposition insisted that it was also a budget of broken promises.
Signed off by the Cabinet earlier this week and submitted to Parliament yesterday, the new draft budget provides for a 4.9 percent rise in expenditure, reported ETV.
Presenting the bill to lawmakers, Prime Minister Andrus Ansip said: "The government drafted the 2014 state budget in a time when our unemployment has quickly decreased, salaries have grown, by as much as 8.5 percent according to Statistics Estonia's most recent data. Budget revenues have come in better than expected. Yet our economy will grow more modestly this year than was expected - by only 1.5 percent. Our primary export partners' situation is also uncertain."
The draft budget's priorities included raising public sector salaries and pensions; the opposition said the bill leaves out funds to support children, local government revenue, and reforms to raise the income tax free minimum.
Leading opposition MP Kadri Simson, representing the Center Party, said: "This budget lacks child support and we see that in terms of school meals. It lacks restoring revenue that was cut from local governments […] and it lacks tax breaks to small and medium salary workers."
With regard to the last criticism, the finance minister has both claimed to have proposed raising the tax free minimum, and to not have made any solid pledges on it.
"To sum up the opposition's side of the story, I would be a good minister if taxes were to go down and expenditure up. But I myself think they need to be in balance," Ligi said.
"We opted to keep the state employees' pay rises somewhat at the same pace with the private sector, but not too high. Our priority was pension raises and pension tax free income.These are just a few elements, there is a lot to talk about in 8 billion euros," Ligi said.
As for the criticism of overly generous public sector pay raises, Ligi said: "It's interesting to hear an expert say that the pay raise exceeds economic growth figures. We are dealing with nominal economic growth here, and, first of all, [pay raises] will fall short of nominal growth. Secondly, they will fall short of private sector raises. In some areas they are matching the private sector pace - social, cultural and education. Teacher's minimum wages will rise 12 percent, for example."
Members of the opposition have pointed out that the child benefit has not been raised for 10 years. Another issue was support for children's extracurricular activities.
"Hobby activities have never been a state function," Ligi said. "Although such an idea has been proposed, there was not enough money. I personally have never made that promise."
"The greatest way to show care for children is by not leaving them and their children a debt. We are raising salaries for occupations that directly serve children, such as teachers […] Children do not need cash; they need services such as education and health care. We are dealing with that."