Prime Minister Taavi Rõivas said in his address to the Parliament upon handing over the draft state budget for 2016 that the budget is responsible, will strengthen security and improve the welfare of children and pensioners. The opposition, on the other hand, characterized the budget as unbalanced and lacking long-term vision.
The national budget for 2016 is planned at 8.9 billion euros – 4.2 percent, or 358 million euros more than the state budget for 2015.
The government intends to increase the salary fund of teachers, cultural and social workers, police officers and other internal security professionals by 4 percent. The average old-age pension for people with 44 years of employment will increase by 5.5 percent, or to 396 euros per month.
At 451 million euros, the national defense expenditure will continue to exceed 2 percent of GDP, reaching 2.07 percent this year.
371 million euros are earmarked for strengthening internal security. Besides increasing the salaries of police officers and other internal security professionals, the priorities of 2016 include the completion of fortification works along Estonia’s eastern border with Russia, costing 20 million euros, as well as improving Estonia’s rapid response capability and upgrading the equipment used by the Police and Border Guard Board and Rescue Board.
Child allowances for the first and second child will increase to 50 euros per month, while the amount of allowance for the third and each subsequent child will be 100 euros per month and that of foster care 240 euros per month.
Opposition: the budget lacks vision
Andres Ammas, the deputy head of Free Party faction in the Parliament, said that it is a "ticking budget", funded by tax rises and increased revenue from various fines. “It's not a master plan. The young prime minister will be sighing with relief that he has managed to stay in power for another year. But how does this budget reflect the core purpose of independent Estonia? The government seems to think that economic growth will come turn positive by itself – all while the revenues from export are declining and our neighboring countries are economically struggling,” said Ammas, making a reference to Finland.
“Despite the fact that the government has tried to scrape up money from everywhere – fuel duty hike, increased value added tax on hotels – there is a budget deficit. All in all, it will reduce the competitiveness of Estonian businesses,” Ammas added.
Center Party faction head Kadri Simson also drew attention to budget deficit. “We're again in a position where the government says that year after the next will be better and the budget will be balanced, but our reserves are shrinking seventh year in a row,” Simson said.
Simson added that although Reform Party has agreed to increase the tax-free income threshold from 154 euros per month to 170 euros, it is still far short of what was aimed at by the coalition partner Social Democrats who wanted to increase it to 400 euros. “If we keep raising it only by 16 euros per year, we will not see the 400-euro tax-free income threshold before 2030,” Simson said.
Martin Helme, the head of Conservative People's Party faction, said that the 2016 budget does not give any indication how to ensure long-term economic growth. “In general, it's taking from one pocket and putting into another, rather than increasing revenues,” Helme said, adding that the budget should allocate funding for policies which would bring back Estonians who have left the country.
The government said it aims to reach a structural surplus of 0.6 percent of GDP.
Editor: S. Tambur