The government has proposed a plan to support investments to the tune of €160 million over the next four years. For instance, if an investment reaches €100 million, the related investment support would amount to €15 million. What do you think of this plan?

Any effort to attract major investment into Estonia is most welcome, and entrepreneurs have been talking about it for a decade or more, that our problem has been a lack of significant replacement investments, or that large-scale investments of this kind are reluctant to come to Estonia.

However, I remain convinced that success does not depend on a single measure. Rather than that, I believe that all other conditions that create an investment-friendly environment will play a role, and taxation is one of those.

I understand that this measure is aimed more at attracting foreign investment rather than supporting local businesses' investments. But how do you interpret it?

I can't really comment on this specific measure —it's so far still quite fresh. My personal view is that certainly in today's geopolitical climate, the idea of Estonia's new economic growth coming from foreign investors, bringing in hundreds of millions is, unrealistic. In this decade, replacement investments are likely to come primarily from local businesses, if they have the confidence and willingness to do so.

On the one hand, the state supports investments with this new scheme, but at the same time, it wants to collect €200 million a year from businesses via taxes.

Watching the tax debate from the sidelines, it has looked a bit like panicked bartering. The whole discussion revolves around what the tax base or tax rate should be, but changing a tax system is a very, very strategic move and should be thoroughly thought through. Any sort of decisions made have far-reaching consequences, beyond what can be calculated just in an Excel sheet.

Plus I think a misstep in taxing business income could render this other measure meaningless, as investments won't come here anyway; capital would flow elsewhere.

Estonia's tax burden is not low: Lithuania's is already lower

If there is to be any change in the tax burden at the corporate level, it must be accompanied by a comprehensive review of the entire tax system— whence the tax burden is reduced.

If not, we risk positioning ourselves poorly in terms of international competitiveness as an economic environment.

And then all the previous impact assessments would then become irrelevant. I believe this is a crucial debate, but it is one which has not yet been held publicly. In my opinion, no political party has sought a mandate for this during elections, and this could be one of the key topics in the next elections: How should the tax system change in a changing world?

In terms of labor taxes, we are relatively on par with the Nordic countries and Europe.

When it comes to companies, there is still some room for growth compared to the Nordics, but the main difference lies in how capital gets taxed.

But if we are simultaneously trying to attract capital to the country, to emerge from an economic downturn, and then start taxing that capital, it's obvious to all that this approach will fail.

This makes a more strategic outlook necessary. Unless I'm mistaken, the Foresight Center (Arenguseire keskus) has already carried out some in-depth thinking about the future of the tax system in recent years, then I think politicians should draw lessons from that and not wrangle random thoughts.

If I understand rightly, this taxation is being justified by security needs. I fully agree with that. I believe that the €1.6 billion should be immediately invested, into our security. The €1.6 billion, in light of the recent bond issue, means about €53 million in interest for Estonia.

If we take €1.6 billion to invest in our freedom then divide that by Estonia's 2023 GDP, it comes to about 0.1 percent. Or, if we divide it between the Estonian people, it's about three euros per person per month. That is not very much.

In my opinion, these two issues — security and economic growth — are unrelated.

That which needs to be done for security should be done immediately.

The debate on how to build Estonia's new economic growth is however directly tied to the health of the Estonian economy. The well-being of Estonian society is in turn directly connected to the economy's health. With a weak economy, it's impossible to improve life in Estonia, no matter who is in office.

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