Minister: If we raise defense spending, we must discuss tax changes

Defense Minister Hanno Pevkur (Reform) said if the government decides to extraordinarily increase defense costs than a wider debate needs to be had about the future of the tax system.
"In short, there are three options: either raise taxes, borrow or introduce some form of bond," Pevkur told ERR on Friday morning, commenting on plans proposed by the head of the Estonian Defense Forces Gen. Martin Herem and Ministry of Defense Permanent Secretary Kusti Salmi to spend €1.6 billion on ammunition.
"Ultimately, all of these options – including the bond and the loan – will have to be financed somehow. So ultimately, I do not see that there is any way that this decision can be made within the existing budgetary constraints, which is to say we certainly cannot save enough in the national budget to stockpile more ammunition. And consequently, of course, it implies some kind of decision – whether it's a comprehensive national defense tax, whether it's a loan or whatever. But in any case, it means that we have to start debate about tax, taking into account the fact that other areas will certainly want to get additional funds for their own areas in the course of this debate," said Pevkur.
At the government's weekly press conference on Thursday, Minister of Interior Lauri Läänemets (SDE) said money is needed for several areas and that tax changes are needed.
Pevkur said the general need for €1.6 billion of ammunition has been publicly discussed before and is not surprising. However, he said the specific details have not been published, including the exact cost and type of ammunition requried.
"And once those calculations are in place, once they have been looked at a little bit more, then you can really move forward at a reasonable pace," he said.
"We have talked with the Minister of Finance, the factions, and now, as a natural process, we will move on to the National Defense Committee, and of course, no one will delay anywhere," the minister added.
Asked when he will take a specific proposal to the government, Pevkur said the issue has been discussed with Herem, the future EDF chief Andrus Merilo, and Salm since the start of the month. It has also been presented to various political parties.
"Now we have reached the point where the [Riigikogu's] National Defence Committee will get a detailed briefing on Monday and after that, when we get all the feedback, we can also bring this discussion to the government's table. Whether it will be in a few weeks, whether it will be sooner, whether it will be a few weeks later, I cannot say at the moment," the minister said.
He stressed that when bringing this topic to the government, all ministers need to be present as it is a very big political decision. Any agreement would result in changing Estonia's tax policy or borrowing money.
"Whatever form the solution takes, we will discuss it and try to make a decision as soon as possible. But at the end of the day, as I said, there is nowhere else for the money to come from in the national budget but out of the taxpayer's pocket," he said.
Pevkur did not say how much he would ask the government for.
"But, of course, it must also be taken into account that taking on such a huge additional burden on public finances means that the Estonian taxpayer will one day have to pay for it one way or another," the minister of defense repeated.
The debate about purchasing extra ammunition arose on Wednesday, after Ministry of Defense Permanent Secretary Kusti Salm announced his resignation saying the government was refusing to buy critically needed ammunition worth €1.6 billion. Officials said they were unaware of the issue or that they did not have detailed enough information about the proposal. But EDF chief Gen. Martin Herem said both he and Salm had made their views clear to the government.
--
Follow ERR News on Facebook and Twitter and never miss an update!
Editor: Mait Ots, Helen Wright