Toompea's rumor mill also has it that if the current negotiations fail, Isamaa would be prepared to form up a coalition, replacing either Eesti 200 or SDE.

Opposition party Isamaa's deputy chair, Riina Solman, suggested the tendency towards tax hikes would need addressing before that could happen.

She said: "Others always seem to know more about Isamaa than we do."

"Certainly we would get to know more about Isamaa if this policy of burdening people with tax increases continues, but no one understands it as a rational policy. In that case Isamaa cannot support such a thing."

Coalition talks between the three existing governing parties were triggered by news Kaja Kallas will be stepping down this month as prime minister.

The talks have been going on for a week. Andrei Korobeinik, a leading Center Party member, says the most difficult issue for the parties remains finances, adding the decisions bear the Reform Party's "face."

He said: "Unfortunately, the bank tax is still not the main issue, the tax hike is still not the main issue. And in this sense we are sorry that other parties, who could find an opportunity to put pressure on a bigger partner, do not do so."

Riina Solman said that no major changes would be forthcoming.

"Now they are talking about a national defense tax instead of scrapping the half a billion income tax reform. Isamaa's solution has been government bonds," adding that there were other ways to support national defense beyond tax hikes.

"People have a lot of deposits in their bank accounts and people could earn income from these, and contribute to national defense," she went on.

Mart Helme, deputy chair of the Conservative People's Party of Estonia /(EKRE), said that from the outside looking in, the negotiations seem uncertain.

Helme said: "It is likely that there will be plenty of demands on how to improve the public finances and how to bring tie ends of the together in such a way that all the huge fanfare about helping Ukraine and defense spending and security can certainly be reconciled with reality."

Helme said he believes that just two parties will form the next coalition: Reform Party and SDE.

This is partly because both parties ranks have been filled by people who have left other parties, mainly Center.

Korobeinik however said the coalition will not change: "Looking from the sidelines, it seems comfortable for the Reform Party to keep its existing partners."

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