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Prime minister: 2023 state budget to contain no tax hikes

Kaja Kallas.
Kaja Kallas. Source: Siim Lõvi /ERR

The 2023 state budget will be ready by the end of September despite complications arising from the economic and security situation, Prime Minister Kaja Kallas (Reform) said Thursday. A deficit will be run, instead of raising taxation, she added.

The government's priority with the 2023 state budget is to support the most vulnerable people in difficult times, in addition to ensuring Estonia's security, Kallas said. "It is clear that we must also think about the future, invest in education, make other investments," the prime minister said, speaking at Thursday's regular Riigikogu press conference.

"We have significantly improved the condition of the state's finances, meaning the balance of revenues and expenses. This means that we are at a much better starting point to cope with these difficult times. The budget will remain in deficit for a long time, but this deficit is small enough so as not to threaten state finances as a whole, while it is also a deficit that permits us not to raise taxes," the prime minister went on.

Substantive discussions were still in progress regarding the budget, as of Thursday morning, Kallas said, while the cabinet will reconvene to continue this process in the afternoon.

The draft budget bill will be ready for submission to the Riigikogu by late September, she said.

Kallas also said the finance ministry's summer forecast, published this week, also confirms the current economic position internationally, which complicates preparing the state budget strategy, and the budget itself, due to the number of variables, she said.

"It is certain that difficult times lie ahead, making it very important that we also think about buffers when preparing the state budget, to enable us to have a solid back ground in difficult times."

Glimmers of hope arising from the forecast mostly revolve around the fact that a small growth is predicted, whereas in spring, economic recession was expected by this time.

"Perhaps the economy has cooled down, but it hasn't really plunged down a hole yet," she added.

As per procedure, the budget and the budget strategy are approved on September 27, then handed over the next day to the Riigikogu, with a view to being adopted as law on December 7.

The bill must pass three readings, and is subject to debating, discussion and amendment, involving MPs and the relevant Riigikogu committees.

Public broadcaster ERR receives its grant for the year ahead as one of the state budget's components.

The 2022 state budget was worth €13.13 billion in revenue, while expenditures amounted to €13.64 billion.

In addition, a supplementary budget was issued in May this year, worth €878 million, in response to the worsening defense and security situation.

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Editor: Andrew Whyte

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