Opposition: Budget bill for 2017 doesn't support economic growth

Prime Minister Taavi Rõivas (Reform) calls the 2017 budget bill a "growth bill". The opposition disagrees (Siim Lõvi /ERR)
9/29/2016 10:30 AM
Category: News

Just hours after the parties’ parliamentary groups demonstrated relative unity in the matter of nominating their common candidate for the presidency, day to day politics continued in the Riigikogu in the debate around the government’s 2017 budget bill.

Prime Minister Taavi Rõivas (Reform) called the bill a “growth budget”, which Center Party MP Kadri Simson said the opposition disagreed with. She brought out the planned raise for teachers as an example.

Simson pointed out that the government’s announced 4.6% increase of teachers’ salaries was far away from the objective of 120% of the national average, seeing as the expected average salary growth for 2017 was 5%, which was already more than the government’s planned measure. “The teachers’ salaries would need to be raised by 11 to 12% to meet this objective,” she added.

Another example Simson brought up was the planned hike in excise duties on diesel fuel. In comparison with Latvia, next year’s tax on diesel would be 44% higher, up from currently about a third. Simson also criticized the government’s approach to agricultural policy, which she called unsustainable.

Deputy chairman of the Free Party’s parliamentary group, Andres Ammas, called the budget an imitation of previous ones. Ammas pointed out that businesses had been unhappy with the government for a long time now, and that the 2017 budget gave them ever more reason to be.

Ammas also mentioned the planned rise in excise duties as an example, as well as the plan to raise VAT on accommodation services from 9 to 14%. On the whole, the budget was an attempt to appeal to as many people as possible, instead of bringing out clear economic policy priorities, he added.

While the prime minister had been talking about what was part of the budget, he had been conspicuously quiet about what wasn’t, Ammas said. No solution to the problem of financing the country’s healthcare services had been presented, and the promised increase in funding for the sciences was close to unnoticeable, he pointed out.

Referring to the lack of money and the recent lay-offs in the police and rescue services, Ammas also criticized that while the government was showing off with its increase in defense spending, a comprehensive approach to national security was missing entirely.

Chairman of EKRE’s parliamentary group, Martin Helme, also criticized the budget, saying that the government was squeezing every last drop out of the economy. There was no chance the economy could grow in such an environment, he added.

Reform insists 2017 budget bill is a "growth bill"

In a press release, the Reform Party’s group said that next year’s budget would lower labor tax, increase child allowances, invest in important infrastructure projects, and support necessary long-term reform, such as the Administrative Reform Act, labor market reform, and reducing bureaucracy.

Chairman of the Riigikogu’s Finance Committee, Remo Holsmer (Reform), said that the government’s work on the budget had been influenced by a lot of external factors like the migration crisis, the United Kingdom’s expected exit from the European Union, and the weak growth in Estonia’s neighbor markets.

According to Reform MPs, the focus of the coming year’s tax policy will remain on moving the main tax burden from labor expenses towards consumption.

Editor: Dario Cavegn

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