The Republic of Estonia of the 1990s was an ambitious and aspiring phenomenon. Estonia had successfully restored its independence, adopted a constitution, established democratic institutions and begun to operate under new rules, albeit with some growing pains.

The goal was clear: to catch up with Finland. Estonia needed to become a European country and, sooner or later, join the European Union and NATO. Economically, the priority of all priorities was to develop into a country with a modern market economy – a liberal state.

The public sphere was vibrant, with members of parliament striving for faster progress and a liberal-democratic party led by Paul-Eerik Rummo advocating for liberal ideas, though it remained small and unable to wield significant political power. Additionally, there were socially and economically active entrepreneurs who, among other things, defined themselves as taxpayers and ardent supporters of a free economy.

The head of state was Lennart Meri – a cosmopolitan figure, a citizen of Europe and the world. We, the local leaders, looked up to him and heeded his advice, which was invaluable.

For myself and many other politicians, politics meant an awareness and adoption of European – meaning liberal democratic – values. However, the fledgling Estonian state had very little money. To sustain the state, taxes needed to be collected. But where would they come from? The newly established Reform Party set its sights on low and fair taxes.

What does "fair taxation" mean? The founders of the United States, notably Alexander Hamilton, were generally opposed to national taxes, but when deemed necessary, taxes should be low and uniform. This means that there should be no progressive income tax, no tax breaks and no exemptions. Taxes are not a tool for building a rapidly developing economy.

In the newly re-independent Estonia, the focus was on privatization – the sale of state-owned enterprises to the private sector. By and large, this process was successful; it was fair and transparent. In many other countries that had faced similar transitions, privatization led to unrest, theft, crime and injustice.

The main idea behind privatization is far more than merely raising money from the sale of state assets. It represents a fundamental structural shift: replacing the state-run economy with private enterprise and individual initiative. Command-based systems give way to profit-driven ones.

The second focus was on attracting productive foreign investment. Estonia's currency reform played a significant role in facilitating these investments. Foreign investments bring not only capital but also expertise, technology and a rule-of-law culture – ensuring fair competition.

I had the opportunity to meet with executives of one of the world's largest industrial conglomerates, Japan's Matsushita Electric (now known as Panasonic). When asked what would influence their decision to establish a factory in Estonia, they provided a quick and straightforward answer, consisting of five key factors.

First, the market – understandably, their products needed to be sold. Second, the rule of law – their property had to be fully protected, with fair courts, etc. Third, the availability of suitable labor. Fourth, favorable taxation. Fifth – and this was very important – they needed to be welcomed." Unfortunately, Estonia had become a hostile environment for complex but crucial productive investments. There are too many examples to illustrate this. The Japanese executives also emphasized that if they came, they would come for the long term.

Once upon a time, there was a man named Adam Smith. He wrote a book on how nations become wealthy – a valuable book published in 1776. His core thesis was that wealth is created through labor, not by the state (or monarch). Do we in Estonia not believe the opposite? That prosperity comes from budgets and government decisions?

For work to generate wealth, there must be division of labor, free competition and free enterprise. The driving force behind free enterprise is profit. If the state confiscates profits, no one can become wealthy.

History reminds us of a well-known political program called the New Deal. This was the program with which Franklin Roosevelt, elected as president of the United States in 1932, fought for the survival of capitalism during the Great Depression, the most severe economic crisis in history. He succeeded, and to this day, the American people regard him as one of their greatest leaders.

However, Roosevelt also faced fierce opposition. Among other initiatives, he wanted to introduce unemployment benefits. The American elite were outraged, calling it an anti-American crime – a colossal crime! They claimed it would rob people of the desire to work, a foundational pillar of American society and its purpose. Social security, they argued, was another crime because it would eliminate the need for Americans to save, instead encouraging wastefulness. Government enterprise, they contended, would hinder job creation by private businesses. And so on.

Estonia steadily pursued membership in the European Union – a pivotal shift. With this came aid funds. Estonia eventually joined the EU, which redistributes 70-80 percent of the dues collected from member states in the form of aid and subsidies.

The competitiveness of the European economy is often considered lacking. What would Americans say? And what would Adam Smith say?

European aid funds have altered Estonia's business environment and overall mindset, turning it into a culture of complaints. Instead of fostering a spirit of economic progress and innovation, creativity is now channeled into crafting applications for support.

In social policy, a strange glorification of poverty seems to have emerged. The media elevates those who are struggling, often highlighting individual examples. It seems as though being poor is treated as a form of heroism. Meanwhile, we do not speak of the successful and prosperous.

In 2027, the Estonian people will elect a new legislative body. What kind of policy will prevail? What does our electorate believe in now, and what will they believe in by 2027?

More and more, we place our faith in the state. Our society seems to see taxation as nearly the only viable means of funding necessary expenditures. But why must the entire state run solely on taxpayer money? It would be more reasonable if the consumers of services paid for them directly. They know best how much of a service they need and at what cost.

Taxpayers are being asked for more and more. There is a limit to raising taxes. In the Nordic countries, society is able to endure a system where the state collects almost half of the economy's total revenue, while in the United States it is roughly one-fifth. History is familiar with rulers who knew no limits. This lack of restraint cost Charles I of England and Louis XVI of France their heads.

The logic for funding essential public services often appears to be backwards. Typically, the first step is for the state to reach into the taxpayer's pocket to address a problem, while the beneficiaries of the service pay a trivial fee, if any. It should be the other way around: service users should pay first, and only if there is a genuine shortfall should the taxpayer be asked to step in.

The Reform Party is likely to do well in the upcoming elections. But what kind of policy will the Reform Party pursue? Should it stick with the status quo or take a different path? As Hardi Tiidus framed it, this is truly a "to be or not to be" question. Do we take a step to the left? Do we wave the banner of populism?

Serious thought is needed. A series of articles are already appearing in the media, proclaiming that the current economic policy is exhausted, ineffective and no longer works. What needs to change? Of course, some argue for a new, more complex tax policy with various brackets, exceptions, incentives and different rules.

But what will those brackets, exceptions and incentives be? For whom and how much? Gentlemen reformers, put it down on paper and then we shall see. Who will do the seeing and in what manner depends on the distribution of seats on Toompea Hill.

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