Opposition MPs: 'New coalition's lying has taken on colossal proportions'

'Esimene stuudio', Wedbesday, April 12, 2023.
'Esimene stuudio', Wedbesday, April 12, 2023. Source: ERR

Leading members of the three opposition parties have accused the incoming Reform-Eesti 200-SDE coalition of lying extensively, particularly with regard to the situation with the state budget and efforts to rectify it.

The March 5 election's conclusion has not spelled the end of televised political debates, since ETV show "Esimene stuudio" held a panel discussion on the incoming coalition's taxation policies, ranging three of its leading members against three from the opposition.

Taking part in the debate, moderated by Andres Kuusk and Liisu Lass, were: Incoming Finance Minister Mart Võrklaev (Reform), incoming Education Minister Kristina Kallas (Eesti 200), incoming Health Minister Riina Sikkut (SDE), for the coalition, and from the opposition, former Tallinn Deputy Mayor Tanel Kiik (Center), MP Siim Pohlak (EKRE) and outgoing Justice Minister Lea Danilson-Järg (Isamaa).

Incoming Minister of Finance Mart Võrklaev (Reform) denies his party's tax hikes, as incorporated in the coalition agreement with Eesti 200 and the Social Democrats (SDE), have antagonized voters who were unaware of the impending rises when they ticked the box for Reform.

Võrklaev said: "Ahead of the elections - in fact, for years, going back to 2016, when, at a time when things were good, Jüri Ratas' government first allowed the state budget to drop into the red, the Reform Party has been saying consistently that we cannot live beyond our means."

"The Reform Party's goal is to put state finances in order, in the same way as we said that the tax burden will not rise. If you take a look at the economic forecast, the tax burden will drop to 32.1 percent, by 2027," he went on, stressing that a Reform plan to eliminate the so-called "tax hump", bracket-creep in other words, will leave people with more in their pockets not less.

Kristina Kallas (Eesti 200) said that her party had also stated before the elections that the government's long-term spending plans were out of control. At the same time, according to her, Eesti 200 felt that the budget deficit could be reduced via cuts, though the time for that as the sole solution had passed.

Kallas said: "The question is simply this: So far as we know, it would have been viable to have had these long-term costs under control, of we had a balanced budget, made cut backs and put a brake on long-term costs."

"What happened, unfortunately, was the economic recession and the consequent fall in tax revenue, which brought us to the scenario we have today, one where we're not really going to be able to even get out of this hole just by making cuts," Kallas added.

Riina Sikkut (SDE) pointed out that her party had talked about the need to raise taxes, ahead of the elections, and not after the coalition formation.

Sikkut said: "There has been a very sharp debate about tax increases within every political party in the run-up to the elections."

"Tax increases are not popular, and it is not recommended to include them in an election program. The Social Democrats also held a sharp debate about whether we, in a transparent way, would include the tax increases [in the manifesto]."

"We did so because, as Mart Võrklaev and Kristina Kallas have said, it is not surprising that additional revenues were needed to cover fixed costs. This was already known. The differences in worldview now related to where to source these additional revenues from," Sikkut continued.

Sikkut added that her party is not satisfied with the policy of eliminating the tax hump, but that this had represented a compromise.

The presenters asked Lea Danilson-Järgi how Isamaa, which was had been a part of the outgoing coalition, could be surprised over the fact that the state coffers are in bad shape.

Danilson-Järg said: "Isamaa did not fill the Minister of Finance post (which was held, in the outgoing coalition, first by Keit Pentus-Rosimannus and then by Annely Akkermann-ed.) and we based things on the minister's statements. Both during the state budget negotiations (starting late summer last year-ed.) and, in fact, quite recently, the minister repeatedly said that all was well with state finances and we are within the prescribed parameters."

"But now, after the election, to then say there's a huge hole in the budget, and be mendacious about how that hole was somehow caused by previous decisions... But the gap was created by the desire to eliminate the tax hump in order to redistribute tax-free income. This is the real hole in the budget, and the tax increases are surely the result of this."

"The hole derives from the fact that the Reform Party made an election promise worth half a billion, which it still wants to implement in the current security situation, one where we should focus on security spending, by increasing taxes," she continued.

Kristina Kallas said that it had not been necessary to raise taxes in order to eradicate the tax hump, but due to the fact that this year's budget, which was approved by the previous government, was already in a very significant deficit. 

"The holes in the budget that have been created since 2017 have built up a lot, and the long-term costs have become completely out of control. I don't want to say that Jüri Ratas is to blame, or Isamaa, but this has been a long-term process, one which we are currently trying to get out of and somehow get this country back on track," Kallas continued.

Danilson-Järg recalled that Isamaa had been in the previous government together with the Reform Party and SDE, adding that even then the government already had a long-term plan in place aimed at getting out of the deficit situation.

"These are budgets and plans which were made together," she continued, adding that: "The lying has taken on colossal proportions.

"The fact that the current coalition has already been christened by the media as a coalition of liars is completely right. They are trying to justify the old lies with new lies, and place the blame on others. This is unacceptable, and I believe that the voter understands when they are being lied to," she continued.

Sikkut conceded that the outgoing government had not deliberately made tax changes, adding that it would not have been possible to have enforced them during the short time it was in office.

Sikkut said: "We made exceptionally large expenses without covering it from taxes. This was a conscious decision, because the governing period was short, but there was an energy crisis and compensation had to be paid. All parliamentary parties, save Eesti 200, have been in office and the deficit has accumulated over the years; there is no point in looking for a scapegoat."

"The situation is exactly as it is. But worse than that, the public services we provide do not meet people's expectations. In fact, in education, in the social sphere and in health care, the people want us to collectively contribute more. So it is not enough to balance the tax burden. We have to to be able to do more," Sikkut continued.

Siim Pohlak (EKRE) said that the incoming government does not have a mandate to hold a tax "rally".

He said: "Estonia will become the country with the highest consumption taxes in Europe. You were supposed to make Estonia one of the five richest, but instead, we will get the highest taxes. We will be getting an increase in VAT, but with that we will hit the poorest, those with fixed expenses who have to spend on food, clothes, fuel. They will take the biggest hit. Things shouldn't be that way. It could have been different, and EKRE would have done things differently. There is no need to put our hands into the pockets of Estonian people."

The economy needs to be kickstarted by encouraging entrepreneurship, Pohlak added.

"In 2009, during the previous economic downturn, the Reform Party resolved the problem in the same way, by raising VAT, consumption taxes, and fuel excise duties. Unemployment rose to 20 percent, and tens of thousands of people went to work in Finland. This has already been tried, and it doesn't work," he went on.

Tanel Kiik (Center) said Reform had uttered many falsehoods to the electorate, in the run up to the elections.

Kiik said: "It has been this story about how pensions will rise, how the tax burden won't increase, how the state's finances will be kept in safe hands. The Reform Party put together the last two state budget strategies and was very well aware of the state's financial situation, actually deepening this disparities, as Annely Akkermann frankly admitted today.

"This was that a budget with a deficit of €1.2 billion was deliberately agreed upon by the previous coalition, one which the Center Party was not even a part of. And now to start saying that someone somewhere did something wrong in 2016 is, quite simply, idiotic; it is once again misleading the voters," he continued.

"I have the feeling that the change in rhetoric is gradually moving in the direction of honesty. Whereas in the beginning they talked about the Constitution, now they say that it is unpopular to talk about tax increases [ahead of an election] and then comes today's message from the finance minister, that a deficit of €1.2 billion was deliberately created," he added.

Kiik acknowledged that tax increases are needed, but not of the kind that the new government is planning.

"We said before the elections also that talking about taxes was needed, and we came up with proposals that many certainly wouldn't like. Why we have a confrontation and why the ratings demonstrated disappointment in the Reform Party is that Reform talked about something completely different. Now, actions are being taken that were not allowed, and the things that were served to the people before the election are left undone. Perhaps the problem is not whether tax increases are needed - they are needed - but not of the kind that one particular administration puts in place, but those that support the poor and the middle classes, not taking money from them in order to support the wealthiest. But the problem is that you have to tell the voters in advance what you intend to do after the elections, and not tell them afterwards that somewhere between the lines you should have read it yourself," said Kiik.

Kristina Kallas added that the government's tax increases have received a lot of attention, but the coalition agreement also clearly states that all ministers have an obligation to make cuts. "It is also written in there that there will be a moratorium on state expenses, i.e. we will not increase any item of expenditure until we have balanced the state budget. Conducting state reform is also accounted for in there."


Follow ERR News on Facebook and Twitter and never miss an update!

Editor: Andrew Whyte, Merili Nael

Source: 'Esimene stuudio'

Hea lugeja, näeme et kasutate vanemat brauseri versiooni või vähelevinud brauserit.

Parema ja terviklikuma kasutajakogemuse tagamiseks soovitame alla laadida uusim versioon mõnest meie toetatud brauserist: