Läänemets: It came as a surprise that we are lowering tax base by 1 percent

Lauri Läänemets.
Lauri Läänemets. Source: Ken Mürk/ERR

According to Interior Minister Lauri Läänemets (SDE), Finance Minister Mart Võrklaev (Reform) wants him to cut a fixed amount; however, the ministry has to deal with rising costs. Läänemets said that in addition to cuts of several hundred thousand euros, the revenue side of the budget should be reevaluated, as the coalition agreement's expectations may not be met.

How big are the proposed budget cuts by the Ministry of the Interior?

The amount is in the millions, but we need to understand the context. Now that we have taken on €9.9 million in additional responsibilities, this sum also comes at the expense of someone's working hours or a reduction in internal operations.

What new responsibilities do you have?

We have adopted various laws. The hate speech law, for example, is a pending bill for which there is no agreement yet regarding funding. Again, this means some internal cuts.

Then we have the earlier cuts made by the Center Party and Reform Party government that are now in the national budget strategy: it is €2 million for the police and €800,000 for rescue services. To make this happen, we must let go of dozens upon dozens of people. I don't want to implement it and I am actually seeking alternatives to this during budget negotiations.

Then there are the so-called critical costs, for which additional funds are needed, approximately €11 million. A few years ago, for example, the government allocated a one-time sum to the rescue department for the purchase of emergency supplies and the lease of storage space. There is however no regular funding (€2 million) to continue renting these facilities. If we don't receive the structural funding, should we just forsake all of these supplies or do we have to find the again some additional funds internally?

In the end, we are already talking about tens of millions of euros and now adding another over €10 million, which Mart Võrklaev is suggestion we should de, is simply not doable.

Have these numbers and targets been on the table since the June discussions in Maarjamäe?

Yes. The finance minister had one vision, while everyone else had another. So there was no clear agreement, irrespective of the minister's wish. These numbers have been the subject of discussion for the past few weeks again.

It is good to remember that the budget has both revenue and expenditure parts, and that not all of the revenue anticipated in the coalition agreement is currently coming in. So we should think how to fill the gaps. And this is possibly hundreds of millions of euros.

How do you think to solve it?

We have come to some agreements, but I will not be more specific at this time. However, the finance ministry said that despite the fact that we are increasing all taxes, the effect of lowering the tax hump (bracket creep -ed.) will result in 1 percent reduction in the overall tax burden. In the end, this represents a deficit of over €100 million in the national budget. So what are we really doing trying to find €500,000 or €100,000?

The other revenue-raising initiatives specified in the coalition agreement have somehow got off the ground, but the car tax has not...

I would not say that the car tax is not to be taken into account. We have not changed our minds on this. But there are a lot of tiny things that add up to pretty large sums on the revenue side.

What do your millions in savings consist of?

We have agreed not to talk about it.

I could perhaps give one example: many police resources are used to transport detainees or interrogate them. It can take an entire day of police work. We discussed with the Ministry of Justice that moving them from the detention center to the court is not always strictly necessary, especially if the judge can be also reached online.

I can give another example. We have a large number of cars that have been seized or confiscated and the police must deal with their upkeep and care. But in fact, these car could probably be disposed of in some way; it is pointless for police officers to work as parking attendants.

We have examples where an expensive car had to be repaired since it had been left standing for an extended period of time and its value was no longer what it used to be.

Are all the other ministers also prepared to give away the important things in their areas of responsibility?

Everyone has comparable proposals. But I absolutely disagree that we are making cuts in an ignorant way, not understanding which services are being given up. This is a straightforward matter: if €10 million are to be cut from the budget of the Ministry of the Interior, it will be in the number of police officers and rescue personnel.

The proposal should be something like, "let's reduce service personnel by this or that number and forego these particular services." This is reasonable. But, for the time being, it's more like, "let's take the money away and then let the interior minister explain why some things don't work." This does not strike me as fair cooperation.

What about the revenues, what is the problem?

Essentially, we were unable to calculate that the tax base would be reduced by 1 percent. This is new to me; I didn't know it could take such a large sum out of the national budget.

Also, there is an issue of how we will repay this loan that continues to grow. With the current revenue base, it makes no difference whether we cut €50 million or €70 million; neither amount solves the budget's structural problem. Either we must make significant expenditure reductions or rethink the revenue side.

Is there no solution in the coalition agreement?

Our preliminary estimations appeared to be somewhat optimistic. But I would say that we are not there yet. There is a lot to discuss about. And instead of focusing on the costs, I would look at the revenue side first.

I also have a question about the car tax, will Võrklaev's proposal as it now appears in the draft document, pass?

The minister largely took into account our wishes. People who don't have the money and must drive are more likely to have older cars, so the tax burden for the less fortunate is substantially smaller.


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Editor: Kristina Kersa

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