Estonian interior minister: Next year's state budget more or less in place

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

According to Estonian Minister of the Interior and chair of the Social Democratic Party (SDE) Lauri Läänemets, next year's state budget is already more or less in place. However, Läänemets added, the possible introduction of a new bank tax and any major changes to the budget strategy for the coming years are still to be decided on.

Interior minister Lauri Läänemets(SDE) said that the discussions on the new state budget would resume on Monday, starting at the same point from which they had left off last week. Members of the SDE's leadership also met on Sunday, with some additional comments and suggestions arising from that meeting, to be put forward during Monday's discussions, he added.

Läänemets said that a fair approach would involve the state budget deficit not simply being covered by increasing taxes for regular people.

"If we only tax people who have a salary of €1,000, we will just create more problems, because their standard of living will no longer allow them to live normally and we will have to start paying them social benefits. It's simple logic: money can only be taken from where it is. In Estonia, there are untapped opportunities in the tax system concerning the classic corporate income tax, property tax and perhaps even graduated income tax, that is, taxing wealthier people more. There are no other options, we have more or less exhausted everything else. I don't think it's out of the question that people will just pay five or seven percent more income tax," Läänemets said.

Läänemets said that the SDE has not made a specific proposal regarding corporate tax. "We have stated the principle that if we need to find €400 million or €600 million in additional taxes, then there must be a contribution from businesses in addition to contribution made by [ordinary] people. How, in what way, to do it, is something we have yet to discuss."

According to Läänemets, a tax on sweetened drinks could raise over €10 million.

Läänemets also said that major changes to the budget strategy will have to be decided this year or next. However, no major changes can currently be planned for the years after that. "We certainly can't do that for this state budget, which is for 2024, because it is not reasonable to make a tax changes worth hundreds of millions of euros in a week in the form of a new tax," he said.

Next year's state budget is now more or less in place, Läänemets said. "Of course the challenge is that we don't have enough funds for roads," he said. "The bank tax part remains unresolved. In fact it could be used to cover the current shortfall in roads and save that sector. Since that money has been taken out of the economy, we would be putting it back into the economy, and not just in a general way in, but in those sectors where the external markets have fallen away at the moment."

Asked if the budget for 2024 would be covered mainly by making cuts, Läänemets said there would also be some tax changes and restructuring.

The Social Democratic Party does not support a change to the basics of the State Budget Act. "There are indeed some parts of it that are going to be changed. However, the principle actually remains the same. We need to reduce the debt burden, we need to get to the point where we can service the debt. Today, the main problem is that we are not able to service the debt," Läänemets said.


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Editor: Michael Cole

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