Neivelt: Europe's economic trends might make the new coalition's life easier
Hansapank founder Indrek Neivelt said the new developments in Europe's economy could help out the new Estonian government as inflation is predicted to increase and the economy grow.
He told ETV that the volumes of new money mean inflation will pick up. “It may mean that the European economy will begin to grow far faster than in the previous years. Euro has dropped nearly a quarter to the (US) dollar. European products are currently far more competitive all around the world, which could lead to very good growth everywhere in Europe, Estonia included,” Neivelt said.
The recent move by the European Central Bank, forcing Eurozone governments to buy up bonds worth a combined 60 billion euros each month, will make Estonian coalition budget talks easier, he said, adding that economic growth will provide financial cover for possible tax cuts.
Neivelt said the new coalition should consider first cutting tax-rates for the low-income demographic, as those cuts can be paid for by the economic growth and by increasing other tax rates, such as the income tax.
He said the state should move towards taxing spending, not people, and labor tax cuts should be a priority.