Watch again: AmCham/FICE pre-election political party debate
ERR News live-linked to an English-language panel debate Wednesday, featuring leading politicians from Estonia's main political parties, going into the March 5 general election.
Organized jointly by the American Chamber of Commerce in Estonia (AmCham) and the Foreign Investors Council of Estonia (FICE), and following popular demand, the debate is now available to re-watch by clicking the video player above.
Moderated by Andreas Kaju of PR and government relations agency META Advisory, the panel naturally mostly focused on factors affecting business and investment, but since these are inextricably linked to the situation with defense and security, energy and many other topics, the discussion covered a broad sweep of issues ahead of polling day.
Main themes as the politicians see it
Representing Eesti 200, a party hoping to win its first Riigikogu seats this time around, was Joakim Helenius, a businessman of Finnish-Swedish origin, who identified the two main issues for his party, going into the polls, as: "We have two state spending priorities, which we would invest more into: One is defense, the other is education."
"This means that the other spending categories will not be priorities – we don't make up fairy stories about this," Helenius went on.
As to finding the funds for this, Helenius said this was down to the private sector which in turn would only be viable with a competitive economy.
"We stand very strongly on behalf of companies, especially export companies, and for significant reforms of the state apparatus – not just at state level but also at local government level," Helenius said.
Representing the Reform Party was MP Andres Sutt, chair of the Riigikogu's Foreign Affairs Committee, who said security was the outstanding theme.
"The defining question of these elections is security. The world is different, post February 24, 2022, and that defines everything," Sutt said.
"The foundation of the state is a trinity based on security, the economy and green investment. These are the fundamental things that will define our path to the future, along with of course robust relations with our allies," Sutt, a former IT and foreign trade minister, continued.
Tallinn deputy mayor and former health minister, Tanel Kiik, representing the Center Party, agreed on the centrality of defense and security, but suggested the current crisis is different from the coronavirus crisis which raged while he was a minister.
He said: "We all agree that at least 3 percent of GDP should be spent on defense, and it's the experts, the generals, who should carry this out."
"But the current crisis is very different from the last one, the Covid crisis."
"Yes, we have had schemes for reducing the energy prices, but, overall the super inflation that is going on, the too low salaries, and the rising unemployment, I still only see the government standing still, and talking about security," Kiik went on.
For Isamaa, victory for Ukraine in the current war was part and parcel of this, Foreign Minister Urmas Reinsalu said. "The defining question is how to survive in these harsh times. One angle is out national security – freedom in Europe, and not just about Ukrainian victory in this war."
"The second question is how to keep our economy competitive, and how to sustain a certain quality of life for our own people, and how to remain, in these harsh times, so that we can also use opportunities for our economy," he continued.
Current Minister of Economic Affairs and Communications, Riina Sikkut, representing the Social Democrats (SDE), said sticking with the current prime minister was a good idea, in the current situation.
She said: "I trust Kaja Kallas to lead Estonia in a time of war. I do not trust [EKRE leader] Martin Helme to do that," getting applause from some audience members sitting some distance from the stage, as a result.
"Support for Ukraine is something we do without question… but at the same time, the most serious structural problem in Estonia, before all these crises, was inequality. Every crisis makes things worse… No with the energy crisis, it's very important to save energy, for a person earning a minimum wage."
"We don't have to change the fact that someone has as a heated swimming pool, that's ok, but we have to ensure that noone has to put their shopping outside, and turn off their refrigerator. But we were in that situation, and we still are, so we can't say the war is the only thing the current government, and the next government, has to deal with," Sikkut added.
Martin Helme was sitting right next to Sikkut, and represented the Conservative People's Party of Estonia (EKRE), which he leads.
As to the main electoral topics, he said: "I think the main issue is that we are in a cluster of crises. It is, I agree, about security, but also about the economic crisis, the energy crisis, and the immigration crisis, which is particularly bad in Estonia, but also all across Europe."
To his right was Andres Sutt (see above), whose party, Helme, a former finance minister, said: "Is in no measure a liberal party, other than by their own measures of course. It's a power party, with a special love for state capitalism and cronyism."
Helme identified the green turn as another major point of controversy.
"We are the only party in Estonia which says that the mad zealots of net zero need to be stopped. The green deal is the most aggressive scheme of redistribution of wealth since the Bolshevik revolution, so we don't agree to it whatsoever," he added.
Helme also noted, in the wake of the applause given to Sikkut, that he was facing a partisan audience, for the most part. "I can see there no votes in here for me, so I'm taking things somewhat as a bit of fun," he went on.
Defense industry innovation
Speaking of defense, a written question submitted by an AmCham member on government support for the Estonian defense sector and related tech innovation was put to the panel, later on in the debate.
Several of the politicians gave "dual use" as a key word, referring to tech and innovation which can be put to civilian and military use in equal measure.
Tanel Kiik said: "Our IT companies and startups are already world class – there are more unicorns per capita in Estonia than in any other country, and these technologies can be used in dual use … which is what Ukraine needs right now."
"From up to 100,000 current Estonian e-residents, 6,000 of them are Ukrainians, the largest component, and 2,000 companies have been made here, and this is one other way we can help them," Kiik went on.
Urmas Reinsalu, a former defense minister, said investment in the sector should be made not only in Estonia, but also in Ukraine.
"Europe is going to have a new attitude in its military industry's ambition, and we should have a part in that, as either sub-contractors or launchers of investments from abroad," Reinsalu said.
"The Ukrainians are also asking for investment into the military industry on Ukrainian soil, and that is something I can see that the Estonian state should be capable of giving guarantees, as Turkey already has done," he added.
Martin Helme said that new innovations would prove to costly at this point in time. "While Estonia has some very nifty, innovative defense projects – small but very effective, but the fact is that military R&D, and all R&D, is extremely expensive, and in the current security situation, we need to focus on arming ourselves with the weapons which have already been invented and produced," he said.
"Everything to do with military procurement tends to go over budget."
Andres Sutt answered that his party was in favor of investment and dual use in this sphere.
"All technologies for dual use represent things that we support – for instance the [NATO] Defense Innovation Accelerator for the North Atlantic (DIANA) program is available."
"Both on the ground and in the air, as the use of drones in Ukraine demonstrates. Whatever works in the battlefield, certainly works in civilian life."
Riina Sikkut called for focused development and an avoidance of trying to do it all. "Yes, there are defense needs, and dual use, which I think we can all support, but I would take a step back and say that in general, as a country, we cannot be the best in every sector. We have to make choices, and there are certain things we have advantages in and should put money into – biotechnologies, genetics, cyber security."
Joakim Helenius concurred. "I agree first and foremost, we can't be the best in everything," he said.
"If we have private enterprises that are developing technologies which can also be used in defense, and we do have some here in Estonia, let's support them for sure. But the state has to support them. We can't just 'decide' we need a defense industry, as we are just too small as a country," he went on.
The perennial question of tax rates, types, thresholds, reforms etc., both within Estonia and in an international context, came up. The representatives mostly restated the official party lines as set out in their election manifestos and hashed out on panel discussions multiple times already, at least in an Estonian-language context.
For Eesti 200, the existing tax system would remain largely unchanged, except in reintroducing a real flat rate and cap on social tax, though at a relatively high level, according to Helenius.
Environmental tax would be one area Eesti 200 might change with regard to unsustainable activities, but only if the state were to need more income, eg. for defense or education, he went on.
SDE would, Sikkut said, have a progressive system which would avoid robbing Peter to pay Paul, in the sense of taxing the wealthier less, only to have to provide bigger support to the lowest earners.
Center would also have a progressive income tax system, and do more work on tax avoidance schemes, and adapt the system to new work platforms which the gig economy has brought about, according to Kiik.
EKRE would make tax cuts on energy, fuel duties, medicines, food, VAT and in other areas, Helme said.
For Isamaa, there would be no new taxes or tax hikes, Urmas Reinsalu said, adding a €5,000 per year tax-free threshold would be put in place per child, per household.
Reform would overhaul the current system, retain a flat rate income tax of 20 percent for everyone, beyond a tax-free threshold set at €700 per month, Sutt noted.
Corporate tax system
Perhaps unsurprisingly given the large proportion of businesspeople and investors in attendance or watching online, moderator Andreas Kaju drilled down further to the question of corporate tax rates in Estonia, the principle of not taxing reinvested dividends, and Estonia's relationship with the OECD's global minimum corporate tax rate proposals.
The topic had, Kaju added, seemed to have been somewhat skirted over in most of the parties' election manifestos.
Joakim Helenius said: "I led the work group that wrote the tax section of our party program."
"We stand for very simple concept, which is that you just don't change taxes all the time. However, much politicians like to talk about changing taxes, what business needs is stability in the tax system. We will stand for the current tax system and not make any changes, apart from some minor, technical ones."
"That's the best way to also show foreign investors that this is a good place to do business in, because we don't have politicians here who keep on changing the rules on you."
Urmas Reinsalu said that EU consensus is important, while withdrawing company dividends should not be penalized.
"First, it is very important that we stick to our national position that there should be consensus on tax issues in the EU. There are going to be massive proposals on tax rises, so this is a precondition, to continue with our tax system, to remain there," Reinsalu said.
"Second, we are not intending any changes in the current corporate tax system, but what we would like to encourage and make easier is about the procedure to make an easier and more flexible way of taxing dividends."
"One thing we have got strong signals about, and put into our program, is the situation of double taxation of these shareholders who own less than 10 percent of a company. We are going to abolish that double taxation. There isn't anything wrong with taking dividends, it should not be punished," he added.
Martin Helme said that his party stood for tax sovereignty.
"Corporate income tax revenue in Estonia is pretty similar to neighboring countries, about 4-5 percent of the national budget, so I would always prefer to leave things as they were, as most businesses prefer stability," he said.
"But at the same time, I am open to the idea that as the OECD and G20 want to have a global tax on businesses, then if we have to do that – which I disagree with because I'm very firm on tax sovereignty – then I would have a very, very high level of tax income threshold, let's say about €500 million per year turnover," Helme added.
Riina Siikut said that this situation was an an unusual one, a: "Rare occasion where I can agree with Martin, where I can say that, yes, when we change corporate income tax systems, particularly when we consider the specifics of our tax system, this can be done long in advance, and there is not that high need or demand – changes can be made if there is a political will – but the global tax is something we could fight first, but in fact maybe it's even good for us if the corporate tax rate is similar international, when we consider tax havens etc. so I understand this is of interest, particularly in this room, but I have a feeling there is no strong political consensus on any changes to be made in the system."
Tanel Kiik said: "It turns out we are all a test bed for Martin's ideas but anyway. Our proposal is to take all the different income types into consideration, and it is a question for the state that we should balance the taxes. We have people working in 'self employed' companies, only paying 20 percent tax, and we have people working in platforms, sometimes paying, sometimes not paying tax, and then of course the majority, who pay social tax, income tax, unemployment insurance fund tax and all sorts of taxes, and this is not very fair."
"So if we talk about choosing between a simple tax system, and a just and fair tax system, then I would go with the latter – and it doesn't always end up being as simple and easy as the current system is, but it will be fairer altogether, Kiik added.
Finally, Andres Sutt said Reform: "Will keep the system that we negotiated and protected within the framework of the global taxation. It is far better for an investor to decide when he or she reinvests into a company, or takes out dividends. If they reinvest, the tax is deferred, so the tax is paid only once dividends are taken out," adding, in response to Martin Helme's remarks about the Reform Party, that the Estonian economy has been growing in recent years, precisely because EKRE has not been in office during that time.
Other topics the debate covered included attracting and retaining foreign talent and ways to do this effectively, energy – renewables, nuclear and fossil fuels, healthcare, immigration and some more existential approaches to the elections as well.
The full panel debate can be viewed by clicking the video player up top.
Please note that the first few minutes of the video contain the introductory remarks by AmCham President Indrek Laul, outgoing FICE chair David Bailey, and moderator Andreas Kaju. The debate topics start at around the 8 minutes 30 seconds-mark. Some brief technical issues with the moderator's mic also occur at one point near the beginning. Audience questions start at the 1 hour 32-mark, and could be fairly described as audience questions-ish, though see the written question submitted by a representative of the defense industry, and answered, above.
The Riigikogu election takes place on March 5, preceded by several days' advance voting.
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Editor: Andrew Whyte