Ossinovski: Fewer opponents of special tax on banks

Day one of a two-day cabinet summit at the Vihula Manor Spa and Country Club, where the 2024 state budget and the four-year state budget strategy are being discussed.
Day one of a two-day cabinet summit at the Vihula Manor Spa and Country Club, where the 2024 state budget and the four-year state budget strategy are being discussed. Source: Jürgen Randma/Government Office

During state budget discussions, opposition to the extraordinary tax on bank profits has decreased, according to Social Democrat Jevgeni Ossinovski. He said that amendments to the state budget basic legislation were also under consideration.

Friday continues the government's budget discussions. Budget savings of €200 million must be discovered for the coming year.

The search for savings and additional revenues began at Vihula Manor on Thursday. At the moment, the options are being discussed in a smaller circle with two representatives from each coalition party: the Reform Party is represented by Prime Minister Kaja Kallas and Finance Minister Mart Võrklaev; Eesti 200 by Foreign Minister Margus Tsahkna and Education Minister Kristina Kallas; and the Social Democrats by Jevgeni Ossinovski, the party's parliamentary leader, and Interior Minister Lauri Läänemets.

Friday evening Ossinovski told ERR that the expenditure side of the state budget was dealt with on Thursday, while the revenue side was examined on Friday.

"Despite the revenue shortfall, it is evident that the situation does not tally up. The fact that we're entering a Greek-like debt spiral in which the debt doubles every four years is neither sustainable nor responsible, which is why we're now working hard to improve the situation. Clearly, this cannot be accomplished in a year; difficult decisions and bad tidings will come," he said.

Ossinovski said that an amendment to the basic legislation on the state budget is also under discussion. "There is also a debate regarding the necessity of amending it to some degree, as it may not be possible to reduce the deficit at the rate prescribed by law. No decisions have been made yet, but this possibility exists."

Lauri Läänemets, chair of the Social Democrats (SDE), sent a letter to coalition partners this week proposing to levy a special tax of €951 million on banks over three years. According to Ossinovski, coalition partners have started to soften on the idea.

"We have been talking about extraordinary taxation of banks. In the current situation, where society is in difficulty and the sector has been doing well, to put it mildly, as a result of decisions made by the European Central Bank, this is undoubtedly one of the short-term measures, which could be taken, so that banks demonstrate greater solidarity with society," he said.

"This issue has been the subject of an in-depth discussion. So, it is being evaluated with an open mind. Given the circumstances, I must say there are fewer opponents," Ossinovski said.

It is impossible to avoid making significant tax decisions, he said. However, he was not yet willing to give away what they could be. "There has also been a review of the various components of labor taxes, but the reality is that decisions on income tax were made in the spring, and there is presently no discussion on raising social tax rates," he said.

Ossinovski said ministries would continue to look for cuts next year.

"The three ministries are conducting a budget review, and there is an agreement that we will also have additional savings next summer, so the process will continue in the coming years. But we won't do it hastily, on the spur of the moment, by removing tens of millions of euros from somewhere else; that would be irresponsible. Due to the fact that one or more areas can be reformed over an extended period of time, allowing for actual cost reductions and a more efficient organization of work and services, we anticipate that the ministries will be able to present concrete plans by next summer," he said.

According to Ossinovski, it cannot be ruled out that the state budget framework will be in place as early as this Friday, but details will be determined in the weeks to come.


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Editor: Merili Nael, Kristina Kersa

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