The budgetary situation is much more complex than that, Ligi added, speaking to ETV current affairs show "Ringvaade suvel."

On the other hand, Ligi said that citizens benefit from a functioning Estonian state as a trade-off for increased taxes.

He said: "It doesn't help much talking about how much citizens will benefit if lower taxes are collected, while if more is collected, they will get poorer."

"Essentially the state is nothing but the cooperation of its citizens, if not a shared asset, while a functioning, solvent state constitutes the wealth of citizens, not poverty," Ligi, who was finance minister during the financial crisis of 2008-2010, went on.

"I don't like those kinds of formulations which suggest citizens will have more money left over and so on, as we will actually invest money into the state, to improve it, be it in television, education, national defense, and all these types of things. These are areas where we shouldn't have the amount of penny-pinching talk that we do hear, every day," Ligi continued.

The government should reassure the public that the money taken from taxes is not "lost," but is put back, in the form of other necessary services.

"A solvent state should inherently provide a sense of security for the future. Right now, it might seem like we are just taking money and pocketing it, but in reality, we need to fund things like healthcare and pay pensions. This should reassure citizens that this money isn't lost; it comes back as other necessary services," the minister said.

On the defense tax as it has come to be known, Ligi stated that the revenue amassed still will not be sufficient to cover all defense expenses.

He said: "The defense tax, as we refer to this suite of taxes, does not even cover all security-related costs. The financial situation is much more serious than just that which we are directly adding to defense and security. The deficit has accumulated and widened over the years, and we had been warning about it."

According to Ligi, the tax increases are not simply based on the whim of the current government, but the direct result of Russia's military actions, plus the actions of previous Estonian administrations.

"It was actually previous administrations – those who lived in deficit during the good times – that raised taxes and that's the problem. Second, of course, there's the Russian regime – the direct and indirect costs of the war are what is burdening us. The current administration is trying to correct these mistakes, and fill the gaps," Ligi went on.

"However we are actually only carrying out half of the work, because we can't make the claim that we are balancing the state budget. We are reducing the deficit by half, compared with what the forecast shows. This situation is actually quite dire, and it's not like it was during the financial crisis, when we managed to balance the budget but from a much deeper deficit - that's what we did that time. But societal attitudes and our capabilities have changed so much, that we won't reach a full balance this time," he added.

Business leader: Corporate income tax would make businesses nervous

In a separate interview with "Ringvaade suvel," Kai Realo, board chair of the Estonian Employers' Confederation and CEO of Ragn Sells, said the introduction of a corporate income tax would cause businesspeople to become wary.

Realo said: "On one hand, entrepreneurs are largely willing to contribute to the defense tax, but there always comes the fear that once that door is opened; it starts with a security tax, then later, the income tax just keeps rising."

--

Follow ERR News on Facebook and Twitter and never miss an update!