The plan so far has been to tax profits in advance quarterly. Have you opted for a different approach now?

No, we have made no decision. What they got out of me during that interview (with Äripäev Radio) is that we're still thinking about it. It was agreed during coalition talks to tax profits. But it's only because the state budget needs revenue. We have a security issue and a fiscal problem. I'm trying to take it from there, because the plan of collecting the tax in advance was inevitable, if we want to have the money quickly. But it still takes time and is very burdensome. It is burdensome for entrepreneurs who will have to make bookkeeping changes, and it is burdensome in terms of collecting the tax, a different kind of effort.

It is clear that it will be more difficult to collect the money if we go with a traditional corporate tax scheme. The incentive to underreport income will surely be created, which is something we don't need. The moral of a defense or security tax is that everyone pays, because security matters to everyone. And it would not be fair if some could just find ways around it. I've had time to discuss the alternative with entrepreneurs, or rather I've received feedback. The initially proposed system would place a great burden on them. Looking to alternatives, the salary fund is one option, with companies still contributing. That would see companies that avoid profit or are in a phase of rapid growth contribute too.

Would it be a system of employers paying a percentage on all salaries?

Basically, yes. The salary fund. The enterprise tax would be a burden in any case. I would not divide society into people and entrepreneurs. Companies are owned by people and they employ people. But that was the compromise reached at the coalition talks. Now, we need to think how to collect that tax evenly and without more red tape. There are other problems, such as international taxation agreements. We need to tell the difference between profit generated abroad or at home. Entrepreneurs would not find it too difficult to just redirect where profit is created. It would be bad news if we were to completement our existing and functioning system with something that sports a completely different logic and robs the former of its advantages, at least emotionally speaking. While 2 percent is not a tremendous amount, the logic behind it and the signal it would send are unfortunate.

Have you presented the proposal to your coalition partners and colleagues?

The prime minister has been briefed. It is now up to me to put it on paper and prove it would be a better way. That while companies would have to contribute more than other citizens, at least they wouldn't have to jump through bureaucratic hoops to do it.

When might we see that paper?

I will try to put something down and share it today. But it's still a mutual exchange, and I hope it won't cause cramping. I had no plan to go public with it like this before negotiations. /.../

Would it only concern private companies, or would the public sector also have to contribute?

The dividing line would be at those who receive funding from the state budget. Taking money from the state budget to contribute to the state budget is meaningless. That's why we're bringing in companies in the first place – we have a fiscal problem. That said, I do understand the meaning of your question and that it does not appear fair. Still, I would urge people to stay calm, as serious public sector austerity is planned. We need to consider what to do about foundations or state-owned companies, as they also mostly contribute through dividends, and we should encourage them to distribute profits, without the need for another separate tax. But it all requires thinking about. Would that seem fair? In the end, the mechanism is the same in that money will be taken away from those who are financed from the state budget as well as from the private sector. We must simply do a better job of explaining that this is not money the government is taking for itself. It is to organize everyone's lives and security.

Should hospitals be obligated to pay?

Personally, I don't think that would be sensible. But hospitals, the entire healthcare and social domain really, have also been ordered to cut back, which can be done in several different ways. I rather believe it should happen at the more general level of the Health Insurance Fund, but it is a matter of future debates where the focus will be. We have no desire to curb healthcare funding, and keeping costs in check is always difficult in that field. To be able to pay better salaries and make investments, other costs need to come down. But the big picture here is that the state is struggling. Everyone needs to feel they are the state's owner and not lose their cool when asked to contribute more.

Should your coalition partners go for it, how quickly could it be turned into law, and when might it enter into force?

That depends on which option we'll pick. If we stick with the initial plan, it will be a massive effort to lay down an advance corporate profits tax. We've calculated that there is no way to have it enter into force before the second half of 2026. We'll need to look at what it would take to execute the alternative, and what would be the necessary tax rate. There are things that still need to be hashed out, and none of it is easy.

Looking from the outside, the additional salary fund tax would perhaps be easier to enforce and quicker?

That much seems quite clear to me. But we need to discuss this with state officials and once more with market participants. I've been doing it here and there for weeks, but we'll need to negotiate the technical details.

What did the prime minister think?

The prime minister has the same information I've had. He was perhaps surprised by the Äripäev Radio interview turning this thing into news. Frankly, I don't even know whether the program has aired. But there was a headline without explanation or context. It was made to look like I was about to propose a plan. No. I explained on the program that it needs further debate, that it is just one idea, and that nothing has been decided. But keeping the press in check is not always our strong suit, which is rather a good thing after all.

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