As of Monday morning, a number of well-known Estonian entrepreneurs had signed the letter addressed to Prime Minister Kristen Michal and Minister of Finance Jürgen Ligi (both Reform): Markus Villig, Erkki Raasuke, Martin Villig, Toomas Annus, Taavet Hinrikus, Rain Lõhmus, Allan Martinson, Priit Põldoja, Sten Tamkivi, Priit Lepasepp, Ahti Heinla, Viljar Arakas, Madis Toomsalu, Kristina Siimar, Kaarel Kotkas, Martin Kruus, Kalle Kiigske, Heiti Hääl and Taavi Kotka. The list is expected to grow.

The entrepreneurs acknowledge the necessity of strengthening defense capabilities, a cause they have contributed to in the past and wish to continue supporting.

"We are also aware of the difficult financial situation of the state budget. However, as entrepreneurs, we are accustomed to looking not at the past but at the future. Therefore, our proposals are driven by the desire to avoid harming Estonia's competitiveness and long-term prospects. We cannot extinguish a fire by starting an even larger one," the entrepreneurs wrote.

The entrepreneurs' proposals are as follows:

"Distinguish between ensuring defense capabilities and stabilizing public finances. The need for defense arises from changes in the external environment, which we cannot afford to ignore. It is particularly fortunate that we have maintained a low national debt so far. It is entirely appropriate to use external loans to finance the sharp increase in defense spending and spread the repayment over generations. However, loans should not be used to finance our current expenses that exceed revenues.

Slow down and, if necessary, halt the indexed growth of the state budget. As entrepreneurs, we have repeatedly had to review and reduce our expenses: it is painful to do, but these steps are unavoidable and ensure stabilization in the near future, followed by growth. We have done this and have experienced it firsthand.

Only retain the state's most valuable and critically necessary sectors. This does not mean diminishing the state, but rather the opposite: preserving the core that defines it. Of course, determining exactly which sectors these are is up to the politicians elected by the people. We all wish to be able to do, have and manage everything, but that is not possible – we must decide what is most important and then safeguard it with even greater care.

Increase taxes on income (i.e., output such as profits, capital gains and dividends) for a limited period. Taxing income affects the weaker segments of society – the broader base – the least painfully, while providing the government with the essential foundation for decision-making. The wealthier segments of society, including the undersigned, have repeatedly expressed, both in words and deeds, their willingness to contribute more to the state than before. We are not making suggestions for others to implement; we will bear the main burden ourselves.

Tax outputs (not inputs) and base any tax burden increases on the current tax base. We welcomed the prime minister's message about ending the hasty 'tax festival,' but unfortunately, this has not yet materialized and is continuing with even greater momentum. Taxing inputs – such as capital, production assets, materials, energy and labor – negatively impacts all companies, with many forced to raise the prices of their products and services, which in turn triggers a wave of inflation. This is especially quickly felt by consumers in sectors with large fixed assets (electric grids, district heating, gas networks, water supply), leading to yet another price surge and an inflationary explosion.

Abandon balance sheet- or equity-based taxation. The result of such a tax would be a dramatic decline in Estonia's competitiveness. If we introduce a tax aimed at driving away capital-intensive ventures, we will miss out on the most ambitious deep-tech investments and the most critical future industries, such as energy production and security. As a small country, we have very few advantages in participating in the ongoing European competition for these future industries. Balance sheet-based taxation eliminates any hope of attracting investment here, and Estonia will simply fall behind other countries. We have already lost some major companies, and balance sheet-based taxation would only accelerate this harmful process. The real loss would not be in the past or present, but in the future, whose benefits would have been reaped by our children and grandchildren."

At the end of the letter, it is noted that the undersigned are willing to form a free advisory body to help implement these ideas.

"We have extensive experience in restructuring operations, managing change, downsizing and then stabilizing. Additionally, we possess broad international business expertise, bridging both traditional companies and those of the future. In our view, there is currently a lack of the necessary expertise and experience within government agencies and offices to make the required structural changes (transparency in spending and real-time reporting; designing a tax portfolio focused on long-term competitiveness; zero-based budgeting for the administrative apparatus; improving the quality of public sector management; enhancing the efficiency and applicability of science and higher education). We are ready to offer this know-how to our country."

Finance minister: Borrowing would only deepen deficit

Minister of Finance Jürgen Ligi, commenting on the entrepreneurs' letter, said that Estonia's fiscal deficit has already exceeded all sensible limits, which problem more public borrowing would only work to exacerbate.

Ligi was also critical of fellow coalition member, SDE's Lauri Läänemets' proposal to introduce laxer fiscal rules so that one-off defense investments would not count toward fiscal balance. While Läänemets suggested the matter has been discussed, Ligi refuted the claim, saying: "No, we have not discussed such a proposal. I believe the interior minister should spend less times commenting on finances. /.../ The fiscal rules have been set, and they are what we've wanted them to be – they're relaxed as it is. We also want others to stick to these rules."

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