None of the coalition parties wanted to take on such a responsibility before the elections, which they would have to carry out in the coalition agreement. The planned tax reform affects the poorest people the most, Jüri Ratas, head of the Center Party, said.
"The coalition agreement is a big disappointment. In fact, no coalition party asked for such a mandate prior to the election. Everyone was talking about raising pensions, with the Reform Party leading the way, there was talk of investment and of assisting local governments. And now we are witnessing a deal in which the coalition is genuinely reaching into the pockets of the poorest and middle-income earners," Ratas told ERR.
Tax increases, he said, will result in a substantial loss of purchasing power for many people. "What is clear is that raising income taxes by two percentage points for everyone and increasing VAT by two percentage points for everyone results in a real loss of purchasing power for people and a reduction in food baskets," he said.
Instead, he believes a progressive income tax should be introduced: "A different approach was needed. This alternative solution requires everyone with a higher income to contribute more — the progressive tax system that the Reform Party fears like the plague," Ratas said.
The tax reform in its current form will cause unemployment to climb in the following months, he said. "Given the recent economic news, with a number of businesses declaring bankruptcy or going out of business, I believe we are just a few months away from a situation in which even more people lose their jobs and unemployment rises. This is a very negative indication for the market and the whole economy," he explained.
Ratas added that the coalition could have gone even further and had supported the construction of Tallinn Hospital. "I was very much hoping that the Social Democrats (SDE) and Eesti 200 would be able to talk some sense into the Reform Party, when they scrapped the plan down last summer. All these critical issues were left out of the coalition agreement."
Editor: Merili Nael, Kristina Kersa