Vox pop: Should Estonia borrow to fund national defense?
Is borrowing in order to spend on defense a good idea? This question was put to several leading politicians in Estonia by the daily Postimees after business leaders petitioned the prime minister and finance minister this week to do so.
Opposition MPs
Center Party leader Mihhail Kõlvart said in response that he had proposed taking out a loan for ammunition purchases at the start of this summer, meaning he supports the initiative, though he cautioned about the worsening state of the economy now.
Isamaa MP Aivar Kokk said, "borrowing is the fastest way," and called for national defense bonds to be issued by the government solely to raise funds for that purpose. However, he added that there is not a straight choice between tax hikes or borrowing, but rather making extensive cuts represents a third option.
Coalition MPs
Tanel Kiik, a member of the finance committee of the parliament (SDE), said the proposals made by entrepreneurs should be taken seriously, though borrowing alone is not enough to strengthen national defense, as it does not help reduce the budget deficit - an exception on defense spending may be needed in calculating the budgetary deficit and keeping this below the EU's 3-percent maximum, he added.
Annely Akkermann, a member of parliament (Reform Party), said borrowing, including through defense bonds, can finance expenses before the corresponding revenue is collected, but nonetheless borrowing cannot replace revenue, and tax revenues for defense spending must be raised regardless; the government's planned security tax is manageable, Akkermann, a former finance minister, added.
Kadri Kullman (Parempoolsed) and Evelyn Sepp (Greens) also spoke to Postimees.
Several well-known Estonian business leaders including the Villig brothers (Bolt) and Taavet Hinrikus (Wise) this week addressed Prime Minister Kristen Michal and Minister of Finance Jürgen Ligi (both Reform) in a letter this week which stated that Estonia should ditch additional taxation on inputs such as capital, assets, energy and labor – even for the stated aim of providing revenue to spend on defense – and instead borrow. The entrepreneurs said the tax hikes threaten Estonia's business competitiveness internationally.
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Editor: Andrew Whyte
Source: Postimees
