Coalition not united on 'tax hump' abolition

While Eesti 200 has not ruled in or out senior coalition party Reform's initiative to eradicate the so-called "tax hump" in Estonia, the third party, the Social Democrats (SDE), have called for the policy to be deferred.
Meanwhile, some opposition politicians point to the imminence of next month's European elections as a background context to the discussions.
The coalition council (Koalitsiooninõukogu, a board representing the three coalition parties both in the government and at the Riigikogu) last night met to deliberate on measures to improve the fiscal situation in Estonia and to sound out support from Reform's partners, the Social Democrats (SDE) and Eesti 200, for a bill to address that.
Eesti 200 chair, and foreign minister, Margus Tsahkna, stressed a need to discuss both a broad-based defense tax and the postponement of abolishing the "tax hump."
Tsahkna said: "In the context of the large deficit in the state budget for the coming years, nothing is off the table."
"Everything is on the table – be it the tax hump, or implementing a broad-based tax from the year after next; all options are being considered," he added.
Finance Minister Mart Võrklaev (Reform) has proposed a negative supplementary budget thanks to this year's lower-than-expected revenue intake, one which would potentially amount to €175 million.
As financial challenges persist, future years will also require a combination of austerity and additional spend.
SDE has suggested postponing the elimination of the "tax hump,"
SDE's Riigikogu chief whip Priit Lomp said: "It seems to me that the majority in society believes that this is not something which must inexorably take place on January 1, 2025, but could occur later."
Eliminating the tax hump, or bracket creep as it is known, was a Reform Party pre-election pledge and would involve putting in place a several-hundred-euro income tax free threshold.
Bracket creep in essence means that as real wages rise, more and more people get pushed up into the next-highest tax bracket.
Reform is however sticking to its stance on the tax hump.
Erki Keldo, the party's Riigikogu chief whip, said: "This represents a real wage increase for many officials, police officers, first responders, and teachers, in 2025."
"We have promised this across several elections. It's a genuine income tax reform, one which leaves more in people's hands during tough times," Keldo added.
Opposition Center Party MP Andrei Korobeinik meanwhile accused SDE of electioneering.
He said: "Of course, they don't intend to do anything of the kind. They want to score points. On one hand, they are in the coalition, and on the other, they talk the populist talk."
Isamaa, also in opposition, has submitted a bill proposing to punt the abolition of the tax bump down the line until 2028.
Jüri Ratas, who is running at the European elections for the party he joined earlier this year and is currently an MP, said: "Merely postponing it would save us over €500 million annually in terms of deficit."
The Conservative People's Party of Estonia (EKRE) has opposed the tax hump but says now is not the time for its abolition.
Party leader Martin Helme said it would take half a billion from the budget.
He said: "We can argue ideologically about who likes it, who doesn't, which income group benefits the most, who benefits the least, or who loses.
"But the fact is, the state budget is €1.5 billion in deficit every year, and we simply can't afford to add another half a billion to that now," Helme, a former finance minister, went on.
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Editor: Andrew Whyte, Aleksander Krjukov
Source: 'Aktuaalne kaamera,' reporter Anne Raiste.