The government is meeting in Vihula Manor to discuss the state budget and the next four years' fiscal strategy. I would like to present sides to the coalition with a set of proposals from myself and the Center Party, Jaak Aab writes.
The Vihula Manor in Lääne-Viru County is the political epicenter of Estonia this Thursday and Friday. Leading figures of the ruling parties are meeting in the manor's Palm House to lay down the lines of force of next year's state budget and the next four years' fiscal strategy.
It is to be hoped that the 800-year-old manor complex's thick stone walls will be cool enough and its high ceilings accommodate enough fresh air to keep emotions in check and make sure that decisions are sufficiently weighed and aimed primarily at Estonians' coping. Measure seven times, cut once, as the old saying goes.
I have participated in similar talks on numerous occasions as minister and can assure the reader that money is the main topic of conversation, with every party trying to lock down as much European funding as possible. Initial interviews coming out of Vihula seem to suggest the government will take the path of least resistance and borrow or lay down a new tax to cover growing expenses. It would be wiser to plot a course for a comprehensive tax reform, while this seems to be too much for the cabinet.
I wish the Reform Party's partners luck and fortitude in standing firm in the protection of their principles. My recommendation is to write down every single agreement as we know the squirrels' (Reform Party mascot – ed.) tend to take advantage of even the slightest retreat. We have a recent example in family benefits. The government has been in office for two months, and I agree with (Center whip – ed.) Jaanus Karilaid who was surprised by how quickly Reform went back on its word. Some things never change.
I would like to present sides to the coalition with a set of proposals from myself and the Center Party. We believe the government will listen to the opposition and have put together proposals for immediate alleviation and long-term solutions. After all, broad-based administration entails listening to all sides.
To immediately alleviate price advance
1. Energy. Immediate measures to support companies and help them handle soaring electricity and gas prices. The universal service should be extended to cover companies. Businesses are struggling with sky-high power bills and need support. Provided the government fails to help, the necessary funds will be taken from end consumers to keep companies from going under. This will in turn result in a spike in unemployment and new social problems. The people will not be able to keep paying for the government's inaction forever.
2. Support for local governments for weathering the energy crisis, similarly to what was done during the Covid crisis for a total of €176 million. So that kindergartens, schools, nursing homes and local agencies can keep working under normal circumstances. Most have fixed budgets allocated by the local government.
It is clear that public service institutions can no longer manage under their own steam. While soaring prices mean revenue for the central government, local counterparts must make do with recent budgets.
3. Lower excise duties on fuel and VAT on food. Excise duties and VAT are the simplest and fastest way to make vital food and transport better available to citizens. Temporarily slashing the rates would not burn a hole in the budget, with compensation found in other taxes.
Next year's budget and fiscal strategy
1. To secure sufficient resources for hiking child and family benefits. Every child needs to lead a full life irrespective of their parent's financial situation. That is why we need to support children and make sure they do not fall victim to recession.
2. To extraordinarily hike pensions by €50 from January 1. Estonia has many single pensioners who find it extremely difficult to make ends meet. Most elderly people spend their income on utilities and medicines, with very little left over for entertainment.
3. To keep the promise of nursing home places for the national average pension. An elderly person must be able to spend their twilight years in dignity without their children and grandchildren having to pay for it. Depending on the nursing home, prices can be many times the national average pension, and younger generations are hard put to support both their families and elderly relatives' nursing care.
4. To secure resources to hike the salaries of teachers, cultural workers, police officers and rescuers. Internal security and culture are among the bearing pillars of statehood. Police officers and rescue workers, risking their lives every day, should not have to work several jobs to support their families or qualify for a home loan.
5. To allocate €850 million for national defense as decided by the previous government and develop medium-range air defense capacity in the next few years. Estonia must multiply its defensive capacity in the current international situation. We need to be prepared to defend our country at a moment's notice. NATO will come, but the first line of defense must be ours.
6. To boost national investments for next year, especially in roads, to alleviate the recession. Estonia must be able to invest in the crisis in order to keep the economy afloat. Estonia's road network is still lacking, and it seems no improvement is in store during this government's term.
7. Investment support for local governments. If we want young families to move to the countryside and rural life to endure, local governments need state support. The smaller a municipality's population, the lower its tax base and the more modest the local government's capacity to develop local life.
8. To ensure funding for free higher education. The latter must not be a privilege of the wealthy few. Similarly, young people just hitting the labor market should not be enslaved using loans, which is why free higher education must continue. Universities need additional resources to keep offering world-class higher education, while this should not happen at the expense of the younger generation. It is the state's obligation.
Editor: Marcus Turovski