Last month, Madis Kallas said he would resign from the post of Estonia's regional affairs and agriculture minister should initiatives he finds important fail to see progress by mid-April.

The topics in question were redistributing tax revenue of local governments, or a so-called Robin Hood mechanism, where local governments' share in general income tax revenue would fall and that in income tax on pensions would rise (effectively giving less fortunate municipalities more money at the expense of wealthier ones – ed.), and a farmland financial lease measure, which was created temporarily to alleviate the effects of the coronavirus crisis, but which Kallas would now see perpetuated.

Now, with just two weeks to go before Kallas' mid-April deadline, the minister said that things have come along.

"I have more meetings scheduled for this week, and my mood is positive. Both the rural affairs measure and local government revenue base changes are actively being discussed on the highest level. Things are moving in the right direction, while we'll have to see whether they'll materialize in decisions."

The minister said that while the coalition government is in agreement that farmers need to be helped and local revenues revisited to reduce regional inequality, "the devil is in the details and debates are ongoing."

Meanwhile, Minister of Finance Mart Võrklaev (Reform) has said that redistributing the revenues of cities and rural municipalities requires longer analysis.

But Kallas said that there are very accurate forecasts for five, six or even more years as concerns effects analysis and changes in revenue of local governments insofar as is possible based on recent economic outlook.

He said that he is working toward making the changes happen before the Riigikogu heads to its summer break.

The minister noted that discussions concern details of potential alleviation measures for local governments that stand to lose in income tax revenue, as well as a ceiling for the reduction.

"There are limits for how much of its growth a local government should surrender," he explained, adding that the ballpark figure for how much the ministry wants to redistribute is €38-43 million annually.

Lawyers looking into ways to reopen agricultural measure

Regarding the Rural Development Foundation's farmland financial leasing measure, Kallas also said that all ministers who have a stake in one way or another agree that the sector, and especially small and medium businesses, needs it.

The instrument was first used to alleviate the effects of the coronavirus crisis to allow farmers to sell their land to the state only to rent it, with a pledge of buying the land back eventually. Kallas considers the measure a perfect fit for the agricultural sector and said that lawyers of the Ministry of Regional Affairs and the Ministry of Finance are looking for ways of reopening it.

"We initially planned to do it in the government, while it currently seems we need to take it to the parliament, which I personally don't mind. Yes, it will take longer and support might land later, but a difference of a few months is no longer critical once we've sent the message."

Kallas was reluctant to forecast whether enough progress can be made in two weeks for him to continue as regional minister.

"I have said where I stand, and I'm making great efforts to get those things moving. New deadlines will come mid-April and I still have time to get it going," the minister said, adding that things are looking up for rural affairs and agriculture at the moment.

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