Kallas refers to Ratas conduct as hypocritical

Prime Minister Kaja Kallas.
Prime Minister Kaja Kallas. Source: Ken Mürk/ERR

Chairman of the Reform Party, Prime Minister Kaja Kallas described as hypocritical Center Party leader Jüri Ratas' position regarding state budget cuts.

The hosts of the "Stuudios on peaminister" talk show on Vikerraadio pointed out that Center only supported Reform's Defense Minister Kalle Laanet in the Riigikogu conditionally, tying delivering Laanet from the opposition's no-confidence motion to Reform dropping its budget cuts plan. Kallas said that she was also surprised when listening to Center MP Oudekki Loone's Riigikogu speech and that it sounded like the Center Party expressing lack of confidence in its leaders.

"Yes, I listened to the speech and you know what I thought? Center MPs are expressing lack of confidence in their chairman Jüri Ratas who was the one to agree on the fiscal strategy, as well as Riigikogu group chair Mailis Reps and head of Center's government delegation Jaak Aab. The Center Party is not a part of the opposition. No, they are in the government, they agreed."

Kallas said that the previous government included in the previous state budget strategy (RES) over a billion euros worth of cuts that were not populated with content. She added that it came up during the new government's RES deliberations.

"Jüri Ratas started by saying that the previous government's empty cuts plan was not really empty. It amounted to a billion euros. We asked to see the plan, with Ratas saying that finding €150 million to save is not a problem. We then reach an agreement, while he goes out and says that we cannot save €60 million the very next day. It is hypocritical. Let him say the same things to his MPs, how he defended those things," Kallas said, irritated.

The PM said that even though the Estonian economy grew by 5.4 percent in the first quarter, budget cuts should not be scrapped. She referenced the Fiscal Council that finds the state should save when the economy is growing and there is the risk of overheating.

"I say that we will not be revising fiscal policy in the wake of this news (GDP growth – ed.). A lot of money is needed to solve the problems of medical workers," Kallas said, pointing to nurses' salary advance demands and vaccine procurements.

Kallas said that Estonia should go over recent tax dogmas or what is taxed and how and what people think should be taxed.

"We have considerable labor taxes in a situation where the nature of working has changed. We all want people to have work and an income. On the other hand, we have not taxed property in kind and should look at that balance. We need to look at digital taxation in light of new OECD agreements. We must also consider excise duties, what we want to promote and vice versa."

Kallas added that she does not want to propose a single tax idea but a complete package where the impact of changes on a person's wallet could be demonstrated.

Talking about the Eesti Energia oil plant, Kallas admitted that it created tensions during coalition talks, with the sides finally agreeing that no more taxpayer euros will be invested in the project, while funding pledged by the previous government will not be pulled.

"Every government can reevaluate decisions. We discussed it at length when we were putting together the coalition. In the end, we reached a compromise in that taxpayer money will not be invested in the plant. But the money already allocated has been spent and demanding its return… There is no compromise there. What matters is that if Eesti Energia claims the venture is profitable, they should need no more state funding. It worries me that the private sector has no faith in the plant?"

Talking about the OECD's proposed minimum income tax rate, the PM said that the OECD is not a legislative body, while it can apply pressure.

"And a country could find itself in the shoes of a tax pariah, which is something we do not want. But nothing will change automatically. The digital tax agenda is rather a welcome thing. There is pressure on us, while we will be applying for an exception. Keeping reinvested profits free of tax matters a great deal to us."

The hosts and Kallas also talked about fall presidential elections. Kallas said that the main talks are being held between Reform and Center, while the opposition is also being consulted. She said that several names proposed in the public have been discussed. The PM remarked that the goal is to find someone both the coalition and opposition could get behind.

"Estonia has a lot of intelligent people who could fill that role. It is first and foremost a representative role. They should also be someone with the ability to unite society and not someone who would rub people the wrong way. In other words, we are looking for someone who would be a good fit for everyone. We are discussing names proposed in the public, while we do not have a candidate yet," Kallas said.

Jaanus Karilaid: Standing up for the Estonian people straightforward

Center deputy chair Jaanus Karilaid said in his reply to Kaja Kallas that Center has always been skeptical of cuts and that austerity must consider the state's realistic possibilities and needs during a time when growth and tax revenue have outperformed forecasts.

Karilaid pointed out that while the percentage to be cut was agreed during talks, Center has been worried about who will be affected by austerity and how.

"We did agree on a cut percentage, while we didn't have the economic growth figures or ministries' plans. Right now, when growth has even surprised experts, they agree that moving towards fiscal balance can be achieved in a better way. We believe the austerity plan should be revised and laying off essential workers avoided. It must not harm the speed at which the economy recovers, our exit from the healthcare crisis, feelings of security and availability of services," the Center deputy chair said.

Karilaid added that while cutting costs is possible to some extent and that dialing back red tape and moving forward with the state reform are necessary actions, mass layoffs or going after things of symbolic meaning are not the way and would require further debate.

"There are places where we can find saving and places where we cannot. Especially if it leads to feelings of injustice or negatively impacts foreign and security policy, lowers quality of medical assistance or education," Karilaid explained in terms of why Center finds the government should discuss ministries' plans in greater detail.

"The Center Party and its chairman standing up for the Estonian people is very much straightforward," Karilaid said, referring to Kallas' accusations of hypocrisy.


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Editor: Marcus Turovski

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