Prime Minister Kaja Kallas (Reform) told Vikerraadio Tuesday that the Reform Party is alone when it comes to tough fiscal and tax decisions.

"Last fall, we agreed on the state budget strategy, with relevant amendments in order by the end of last year. But as far as I'm aware, everything in that strategy has been contested or taken out by the Reform Party. We are still waiting on their proposals for replacing these things," the Social Democrats' leader commented on Kallas' words.

He added that SDE has been of the mind that the strategy needs to be carried out.

According to Läänemets, Estonia should not be afraid to raise taxes. "Because if someone tells you that we'll find a billion euros through austerity, they're bluffing. That would require slashing pensions and healthcare funding. No government which includes the Social Democrats will be lowering pensions," he promised.

"If you ask me for a solution [to the fiscal crisis], we've clearly said it would be sensible to lay down a national defense tax. We have added half a billion euros or more to our defense spending. The Estonian GDP has decreased rather than grown, meaning that defense spending would need to fall by €60 million annually in the next few years. But that is not something Estonia can afford," Läänemets noted.

In terms of what a national defense tax would entail, Läänemets said that it is the firm position of the Social Democrats that in a situation where the Bank of Estonia estimates that 10 percent of Estonians own 60 percent of the wealth, that is where the money should be found. "Many entrepreneurs have told SDE that they would be willing to contribute and contribute more than low-paid people when it comes to national defense," the politician said.

Läänemets also said that looking at World Bank or IMF recommendations, Estonia is discouraged from going down the path of austerity. "I do not know what the finance minister will propose in the end, but the question of where to get a billion euros without hiking taxes remains."

"Leaving aside pensions and healthcare, cutting the state budget by 5 percent yields €100 million, while a cut of 10 percent would give us €200 million. Cutting the Ministry of the Interior's budget by 5 percent of €24 million could cost the jobs of 500 police officers or mean closing ten or more rescue stations. I would ask whether anyone in Estonia, or any party willing to propose something like that, is prepared for Põlva, Võru, Valga, Saare, Järva and Rapla counties making do with a single police patrol. Is that the solution for Estonia, or is the solution finding more money," Läänemets said.

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