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Helenius: €50 million in budget cuts a joke

Joakim Helenius.
Joakim Helenius. Source: Siim Lõvi /ERR

Businessman and Eesti 200 member Joakim Helenius finds that the coalition should form a committee to find ways to balance the state budget as the €50-million cut proposed by PM Kaja Kallas is a joke and the deficit might grow instead of being reduced.

Helenius started by saying that he believes the new government has done well in broad strokes. The businessman also suggested he is not surprised by the task given to ministries to find avenues of cost-cutting in their administrative areas, while he also believes it will come to very little as ministers are naturally predisposed to protect their fiefdoms.

"The government should understand that we need a broader state apparatus reform. That small and scattered sums will not cut it."

"We need to prioritize sums that will help us restore fiscal balance after a while," Helenius said, adding that Estonia has done it before.

"I'm terrified of a situation where politicians have no other lever than tax hikes for balancing the budget. Deficit is not created by low taxes but excessive public sector spending."

The businessman proposes looking at potential austerity over the entire four-year election cycle. "Let us set up a committee tasked with reforming the state apparatus and achieving major saving. Such a committee needs to be run by business people, not politicians and officials."

Helenius told ERR in an interview that the state budget was balanced for 30 years in Estonia, while taxes also remained low. But spending got out of hand during the coronavirus period and is very hard to rein back in.

He suggested that the current government has chosen the path of less resistance in hiking taxes, while costs have virtually not been cut.

"Hiking taxes impacts our competitive ability. Falling competitiveness will cause us to lose in income in the long run. There are no two ways about that. We will not be able to compete with our neighbors in the future, while the government does not seem to understand this."

"The €50 million (that has been proposed by the government – ed.) is a joke, and we run the risk of adding to the deficit instead of reducing it," the Eesti 200 member suggested. "This will cause taxes to be hiked again, which is only when the real crisis will set in."

Helenius admitted that he is disappointed in the Reform Party and Eesti 200.

"I believe our economic and fiscal policy is on the wrong track today, especially looking at the decisions made by Finland's new government. Finland understands that competitive ability is crucial. Finland has even higher public sector costs now (which the new government has promised to dial back – ed.), while Finland is also a much wealthier country."

"But the Finnish government wants to cut back the state apparatus instead of raising taxes. Rather, they are looking to slash labor taxes. It is a momentous decision for Finnish companies," Helenius suggested, adding that he would like to see Estonia's economic and fiscal program resemble Finland's.

Joakim Helenius ran for parliament in the electoral district made up of Harju and Rapla counties in Eesti 200's ranks. He got 2,001 votes and was not elected. The businessman donated €150,000 to Eesti 200 in the first quarter.

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Editor: Marcus Turovski

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