Akkermann: Alcohol excise duty hike probable

Annely Akkermann.
Annely Akkermann. Source: ERR

The outgoing government's Finance Minister Annely Akkermann (Reform) said on the "Esimene stuudio" evening talk show that the most painless way [to raise taxes] would be to hike the tobacco and alcohol excise duties.

Akkermann said she does not know whether she will continue as finance minister as she was not part of the negotiating team. "The Reform Party has several suitable candidates, such as Mart Võrklaev, Andres Sutt, Aivar Sõerd and Maris Lauri," she said.

She revealed that one topic of contention during coalition talks was the Social Democratic Party's proposal of tying minimum wage to the median salary.

"Mathematically, I cannot see minimum wage set at 60 percent of median wage as this would see cleaners paid the same as nurses. Also, what would be the median used, the one in Tallinn or Põlva?" Akkermann said, adding she hopes the proposal did not make the cut.

She said that Estonia will be hard-pressed to meet the Maastricht criteria in the near future. "The deficit started mounting as a result of inflation and soaring energy prices, we also had Covid expenses and other unfortunate concurrences. The family benefits hike (Estonia decisively hiked benefits for families with three or more children starting from 2023 – ed.) was done following pressure from the Center Party, while the Reform Party agreed to find ways of covering the new expenses in the future. That is what [coalition] negotiations have been concentrating on for the past week."

Akkermann said that even though the Bank of Estonia forecasts modest growth to return soon, the Estonian state budget is short around €1 billion.

"It was clear in the budget passed in September 2022 that the deficit is €1 billion, that we would need to borrow and find ways to pay for it after elections. Those who have kept an eye on how the budget took shape are not surprised by the deficit today."

Akkermann said that new benefits will lower Estonia's tax burden from 33.5 percent to 32 percent in 2023, which is the lowest in the EU, adding that Estonia will need to find a way to pay for that.

The most painless option would be to hike the excise duties on tobacco and alcohol, which has not been done since before inflation skyrocketed.

The minister also said she believes the minimum wage will grow next year as general salary advance is forecast at 10 percent.

Regarding Eesti Energia, Akkermann said that incoming CEO Andrus Durejko is very different from his predecessor Hando Sutter. "But we also had interesting meetings with Sutter, despite our differences," the minister said. "I'm a fan of Eesti Energia."

She explained that the government's differences with national energy company Eesti Energia heads were based on its handling of TSO Elektrilevi, adding that it is customary for the management board of a company to leave following differences with the owner.


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Editor: Marcus Turovski

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