"We have had disputes in the past. Yes, our party has also put forward the idea of lowering the income tax-free threshold, but this has not been supported either, for the reason that those who earn the least will be hit the hardest," Kallas said on Thursday.

Eesti 200 and SDE did not support the move, arguing it would primarily affect people with low incomes.

The income tax-free minimum limit is €654 for working people or €776 per month for pensioners. Ministers did not say to what level Reform wanted to cut the tax-free minimum to. 

Minister of Foreign Affairs Margus Tsahkna (Eesti 200) said the government has not yet addressed this issue during informal discussions for the next coalition.

"We have not gone into detail. All of these negotiations are starting, but one thing is clear – as far as the fiscal environment is concerned, the aim is that if we reach an agreement, we will give a very clear perspective of what will happen during this coalition that is being formed and up to 2027," Tsahkna said.

"As far as the issue of the minimum income tax threshold is concerned, we have not dealt with it at all," said Tsahkna. He added that the government must look at how the less well-off can cope.

Minister of Interior Lauri Läänemets (SDE) said reducing the tax-free minimum requires that the so-called tax hump to stay in place.

"When we were discussing the abolition of the tax hump, that was part of it. One was the increase in the minimum wage and the other was the increase in the minimum income tax threshold. This proposal would require us to go back on the tax hump," he said.

"Both the previous and the current government have raised the minimum income tax threshold. It has been very important for people on lower wages and also for some people on average wages or in the middle class – so that their incomes are higher and their livelihoods better."

Läänemets noted that the abolition of the tax-free minimum is possible only for the wealthiest part of the people.

"People who earn €4,000 or €5,000 don't have to. There, the income tax free minimum at that level – indeed Aivar Sõerd is right – should not be that high. We are happy to discuss it if this proposal comes on the table," he said.

Kaja Kallas' last press conference

The government's weekly press conference on July 4 will likely be Kallas' last as prime minister.

Next week, Kallas will attend NATO's summit in Washington and then step down.

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