Last week, Reinsalu sent a letter to Prime Minister Kristen Michal (Reform) with recommendations about how to improve the economy and reduce the state budget deficit.

He said the government's main message and approach are wrong and it is not possible to distinguish the important from the unimportant.

For example, tax increases should be avoided, because they do not increase tax collection, but decrease it as a side effect.

"At the moment, the main problem is that our economy is too small. Compared to projections, our economy is more than €2 billion smaller this year, which means that we will receive more than €700 million less in taxes in the current year. The government forecast that the economy would grow by 2 percent this year, but in reality it is falling by more than 3 percent, and that is a serious problem. The government has not grasped the difficult situation in which the economy and businesses find themselves. To say that this is a problem for the whole of Europe is a misleading and false statement, because last year Estonia's economy was the worst performer in Europe," Reinsalu told Wednesday's "Esimene stuudio."

He added that it is irresponsible to reduce entrepreneurs' confidence with more taxes.

Entrepreneur Viljar Arakas told the newspaper Eesti Ekspres that talking about a major economic crisis is not true and that Estonia is not really doing badly. But Reinsalu said the data shows otherwise.

"We have objective characteristics that show that our economic confidence indices have fallen catastrophically, according to the experts, the entrepreneurs," he said. "Latvia and Lithuania are becoming more competitive, while Estonia's has fallen. I see a serious concern when I talk to entrepreneurs that foreign investors – and our manufacturing industry is largely built on foreign investment – are looking at how to get their capital out of Estonia."

"It's a very difficult situation and we have to think about the competitiveness we have with other countries in the region. We need positive inspiration and I do not see the government doing that," he added.

The Isamaa chairman said the government should tell entrepreneurs that the narrative of tax increases is not in the interests of the Estonian economy.

"[The government has] the idea that we are going to get out of recession on the basis of tax increases and temporary-non-temporary unique tax schemes," he said.

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