A few weeks ago, business representatives proposed the introduction of a salary fund tax, though the idea was not supported from the start by either the Social Democratic Party (SDE) or Eesti 200.

According to Prime Minister Kristen Michal (Reform) the idea also caused mixed feelings among businesses and the government is not currently discussing it as the first option.

"It did not gain much traction with business organizations either. Today, I would say that's why it's not among our favorites. However, the Estonian Chamber of Commerce and Industry, the Estonian Employers' Confederation have instead suggested using either the volume of assets, or the size of the balance sheet, as a basis. We will receive analyses on this from the Ministry of Finance and perhaps (on Thursday) afternoon we will discuss it," Michal said, adding that discussions would continue next week if necessary.

"We will try to reach a solution on what this broad  security tax will look like," he said.

Estonian business organizations have proposed that the government to replace the part of the national security tax linked to companies' profits with a time-limited fee or charge, which all legal entities would have to pay when submitting their annual accounts. The rate of the fee would depend on the size of the legal entity's balance sheet, and the annual revenue for the state would be around €200 million, the organizations estimate.

The SDE are prepared to support the asset tax proposal but also want to link it to a 12 percent increase in the minimum wage, party leader Lauri Läänemets said on Thursday.

Speaking at a government press conference, Läänemets reiterated that the SDE's preference would still be for a tax on corporate profits, which he said would be much fairer and less of an obstacle to wealth creation. However, the increase in the minimum wage is part of the coalition agreement and he said that such things cannot be agreed upon without considering an important part of Estonian society.

"We understand very clearly that raising the minimum wage will have an impact on entrepreneurship and doing business in Estonia. We are trying to compensate for this in a different way. The government has already decided in the past that we will direct more EU funds for entrepreneurship to those regions where there may be more jobs with the minimum wage. There is no way we are going to forget one part of society," Läänemets said.

Eesti 200 chair Kristina Kallas said that whatever decision the government does reach regarding businesses' contributions to the broad security tax, it must first be discussed and agreed with businesses.

"The decision, one way or the other, one tax base or the other, has to be made in dialogue with businesses. There has to be a willingness to pay this tax on the part of those from whom we will collect it. If there is no support for this security tax, it will not come from there. We need to do this together with businesses so that there is a broad consensus," Kallas said.

The Estonian Employers' Confederation has already criticized Läänemets' idea of linking the decision on the asset tax to an increase in the minimum wage. According to CEO Arto Aasa, Läänemets has arbitrarily interfered in the negotiations between social partners and linked them to political agreements inside the government.

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