Leader of the coalition Social Democratic Party, Estonia's Minister of the Interior Lauri Läänemets said that Finance Minister Mart Võrklaev's proposal to cancel €400 million in unspecified tax hikes constitutes a new fiscal strategy debate, which might make it possible to agree on teachers' salaries, new investments, economic stimulus and cancel the abolition of the so-called tax hump.
"The Reform Party's proposal, which I have to say came as a surprise as it has not been discussed in the coalition, amounts to opening up the budget strategy," Läänemets suggested.
"It's wide open now. This also means that when the teachers' strike lands in January and we'll start talking about teachers' salaries, we'll no longer have to wait until August to do it. We can agree on everything now," the politician added.
"I'm glad in a way. I believe we were too stuck in August. As I understand it, the situation is completely new now. I believe the state budget strategy could include important investments. We're talking about education, roads, and we could put more money in the public transport reform, which could liven up the economy."
Läänemets even suggested that Võrklaev's proposal amounts to suggesting that Estonia could cancel the planned return to a flat €700 basic exemption for everyone.
The current system sees the basic exemption fall as a person's income goes up, while the coalition has agreed to abolish this system and give everyone €700 free of tax from 2025. Abolishing the so-called tax hump is estimated to cost around €300 million annually.
Minister of Finance Mart Võrklaev said Tuesday that €400 million worth of unspecified tax hikes in 2025, as laid out in the 2024-2027 state budget strategy, should be canceled, considering the difficult situation of the economy.
Editor: Marcus Turovski