The Reform Party would prefer to increase the value-added tax to generate an additional €400 million by 2025, while Eesti 200 would increase property taxes and the Social Democrats would implement a progressive income tax and tax enterprises.
Reform Party leader and Prime Minister Kaja Kallas (Reform) said that the Reform Party plans to start discussing next week how to find the €400 million in tax revenue currently included in the 2025 state budget strategy as a blank line. "We have a work group on finance, which is working on it," Kaja Kallas said.
Kallas did not not specify what this tax could be. "I can't even imagine right now. My guess is that it should be a tax with the broadest possible base. If we are talking about broad-based security, for which we need this spending, then it really concerns everyone," the prime minister said.
When asked whether she would prefer this broad-based tax to be a social tax, a value-added tax, or an income tax, Prime Minister Kaja Kallas favored a VAT. She said, "VAT, but let's discuss it, everyone can contribute in this case."
Kristina Kallas, vice-chair of Eesti 200 and minister of education, said that labour and consumption taxes should not be increased under any circumstances. "The priority is still to discuss property taxes, as these are the ones that harm us the least in the present economic situation," she said. "Eesti 200 wants to start the debate on property taxes."
Lauri Läänemets, chair of the Social Democrats and interior minister, said they believe the wealthy should be taxed. "Let's not tax poverty, then new problems will emerge. Usually social concerns necessitate reinvestment of state budget funds," he said.
"We should be taxing wealth, so the progressive income tax, and secondly, in addition to the individual, companies should also contribute with taxes, and I think that the Estonian economy and companies are actually at the level where they are able to contribute a few percent. If we change the tax system, there could be some small or growth-phase companies that should not be taxed," Läänemets said.
The Minister of Finance Mart Võrklaev (Reform) said that he thought that asset-based and environmental taxation also deserved consideration. In Võrklaev's view, larger commercial buildings in Estonia could be taxed according to their energy class and CO2 emissions.
In its state budget strategy for 2025, the government planned for €150 million in unannounced cuts and €400 million in tax increases that it has been unable to identify. The prime minister has rationalized the situation by stating that she wants to broaden the tax debate and invite participation from all interested parties.
€400 million is about one percent of Estonia's GDP for the coming year. €400 million in annual tax revenue would mean an extra payment of about €40 per month for each person of working age living in Estonia, or about €480 per year.
VAT is a regressive tax, i.e. poorer households pay a higher proportion of their income in VAT than richer households.
Wealth taxes, progressive income taxes, and corporate taxes affect wealthy households because poorer families typically have fewer assets and lower incomes.
Editor: Huko Aaspõllu, Kristina Kersa