Coalition talks continue Monday, agreement reached on income tax threshold

Coalition talks, from left SDE leader Lauri Läänemets, Reform leader and prime minister, Kaja Kallas, and Isamaa MP and lead negotiator Urmas Reinsalu.
Coalition talks, from left SDE leader Lauri Läänemets, Reform leader and prime minister, Kaja Kallas, and Isamaa MP and lead negotiator Urmas Reinsalu. Source: Priit Mürk/ERR

Coalition negotiations between Reform, Isamaa and the Social Democrats (SDE) did not get significantly closer to reaching agreement Monday, Reform leader and Prime Minister Kaja Kallas said Monday, though progress has been made on the income tax basic exemption, and on education in Estonian-only.

According to Prime Minister Kaja Kallas, the topics of education in Estonian, family benefits and coping are still on the table, but an agreement in principle has been reached on raising the income tax-free minimum to the minimum wage, ETV news show "Aktuaalne kaamera" (AK) reported.

Speaking for the other two parties at the table, Kallas said that the differences between Isamaa and SDE are not particularly fundamental.

Kallas told AK that: "SDE made some major decisions this weekend, they reached what Isamaa had wanted and which was in line with our wishes, namely to switch to Estonian-language education and set a date for doing so."

The parties also reached agreement in principle on an SDE proposal to raise the income tax basic exemption (Tulumaksuvaba tulu), i.e the threshold up until which income is not taxed, to the same level as the minimum wage per month.

Kallas said: "The income tax-free allowance would rise to €654, which is the [monthly} minimum wage. To the amount of the minimum wage, income would be tax-free and this would leave people with more money."

An Isamaa proposal to reform the electricity market can go ahead if it does not violate competition or state aid rules, Kallas added. "Then, I think it would be viable to go ahead with it, but it is also not entirely clear within the working group what is actually possible. A have my doubts about the time-frame, but if the experts say that it does not violate market rules, does not create special situations, those which we can't get rid of later, then we can discuss it."

SDE leader: More-or-less reached consensus on education

SDE chair Lauri Läänemets also said Monday night that a consensus had been reached on the big picture, but details need to be formulated.

He said: "It seems to me that we have basically reached more or less consensus level. Anything lacking in the transition to Estonian education, we can formulate in the discussions, then we can finally make sure that we are all on the same wavelength."

Läänemets added that Isamaa's stance is relatively similar to SDEs, though his party's priority is to increase salaries and train teachers, which, he said, would cost a lot, but the policy would not mean that a few years from now schools would be merged, but rather than children, or their parents, coming from an Estonian-language kindergarten would be able to choose an Estonian-language school, as they wished.

"I think the proposal for a compromise is very strong; perhaps we need to take a little step back regarding Isamaa's stance on the seventh grade" Läänemets went on.

Läänemets said meanwhile that no agreement had been met on family benefits, where the question was still whether to increase support for a family with three children to €600 or to €700. "

"Ultimately, €600 is a very good deal," he added.

The prime minister said that while she is in Madrid this week for the NATO summit starting today, Tuesday, negotiations would continue.

"There will be no break, we still want to put this coalition together quickly, but it seems that others will not be so quick," she said – an oblique reference to Isamaa, whose leader, Helir-Valdor Seeder, on Sunday contradicted Reform and SDE claims earlier last week that a deal between the three parties was on the brink of being struck.

On education, Seeder said Monday that the transition to Estonian-language education in kindergartens, preschools, and elementary schools would start in 2024. In the case of elementary school, instruction in Estonian would begin in grades one, four, and seven, which, he said, would allow the transition to be accomplished within three years - i.e. by 2027.


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Editor: Andrew Whyte

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