Finance minister: By making cuts, we reduce pressure for tax hikes

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Keit Pentus-Rosimannus. Source: ERR

Cost-cutting in the Estonian state budget strategy for 2022-2025 is necessary to avoid tax increases in the future, Minister of Finance Keit Pentus-Rosimannus (Reform) said on the "Esimene stuudio" current affairs show of public ETV television Thursday night.

"The state budget strategy in such form, containing also cost-cutting, is necessary first and foremost in order for us to have no pressure for tax hikes in the future," Pentus-Rosimannus said.

"Cost-cutting was necessary to increase wages for teachers, the police, rescuers, and do other important things," the Reform Party minister said.

She said that all members of the Cabinet were ready to commit to the cost-cutting target in their respective area of administration, and it was also important that after two years during which the private sector has had to very seriously cut costs, also the government is more in solidarity with private sector. 

"The overarching principle of the budget strategy is that we will keep the increase in costs slower than the growth of the economy," Pentus-Rosimannus said.

When presenter Mirko Ojakivi pointed out that where teachers are about to get a rise of €39 a month next year, money will be simultaneously taken away from children's hobby group subsidies, the minister of finance noted that supporting hobby education is a task of municipalities in Estonia. 

"Effectively the choice we had indeed was whether we will support the budgets of municipalities or raise the wages of teachers. No children's hobby group actually should suffer as a result of this change, as the tax income of municipalities will rise by more than €100 million in the coming years. And this means that municipalities will also have possibilities to engage in the performance of the duties that they have and to offer hobby education," she said.

Pentus-Rosimannus stressed that also the talk about a reduction in defense spending is misleading.

"The amount of money going to defense is bigger in each of the subsequent years of the budget strategy adopted today than this year," she said. "Where this year the amount going towards defense is to the tune of €645 million, next year it will be over €700 million." 

Three percent has been set forth as the rate of increase in the payroll of rescuers and police personnel.

"How that will be distributed within the area of administration, these decisions will be made by the ministers in the second half of the year," Pentus-Rosimannus added.

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Editor: Helen Wright

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