"The rise in food prices in Estonian stores has been one of the fastest in Europe. According to Statistics Estonia, food prices in Estonian stores have increased by an average of 40 percent over three years. Due to a combination of factors, people's financial well-being has declined, and the share of income spent on food has become disproportionately large," Läänemets said at the party's council meeting in Tartu on Sunday.

"This means that feeding a family is becoming increasingly difficult, but everyday food cannot be a luxury item. That is why we set the task for this government to find a solution to reducing food prices."

He suggested lowering VAT on basic food groups — including vegetables, dairy, meat, grain, and fish products — to 9 percent.

"We can only do this if we reach an agreement with retail chains to ensure that this money does not go into increasing the profits of major retailers but remains in people's wallets. This will likely also require increasing price transparency to prevent excessive markups," Läänemets said.

Estonia's rate of VAT is 22 percent, but it will rise to 24 percent later this year. Only Denmark has a rate higher than Estonia.

Estonian retailers also called for a VAT exemption for essential food items this week.

Most other countries in Europe already have a similar policy. Some countries, such as the UK, do not put VAT on essential items.

Finance minister: A shameless proposal

However, Minister of Finance Jürgen Ligi (Reform) has repeatedly dismissed the idea. He argues wealthier people would benefit the most.

"In reality, the state would be essentially giving up its own revenue in favor of retailers, but based on both experience and theory, there is no hope that prices would actually fall," Ligi said.

He added that the proposal was entirely cynical, as retail profit margins have increased, and now they are seeking state benefits in a difficult situation.

"This is utterly shameless when the state is genuinely struggling with its finances, trying to fix the situation and raise taxes, and then someone comes along asking for a favor so they can build yet another store," Ligi said.

The minister said high food prices in Estonia are also driven by the expensive and extensive retail network. "That is where the economic root of this problem lies. Another factor is, of course, demand," he noted.

Läänemets proposes energy sector benefits

Another suggestion Läänemets put forward was to create measures aimed at domestic food production, such as energy subsides, support for the food sector, or reviewing competition conditions.

"It is crucial to understand that declining household financial security and increasing social inequality will also slow Estonia's economic development and harm national security, ultimately threatening people's faith in democracy," he stressed.

The SDE's council meeting in Tartu on Sunday discussed education, food prices, and domestic policy.

Presentations were made by Minister of Regional and Agricultural Affairs Piret Hartman and Minister of Infrastructure Vladimir Svet, while MEP Sven Mikser spoke about foreign policy issues.

Additionally, Eneli Kindsiko, associate professor at the University of Tartu and editor-in-chief of the 2026 Estonian Human Development Report, delivered a lecture titled How Educational Inequality Crept onto Our Doorstep.

The council will also appoint the party's acting secretary-general and approve the party's 2025 action plan and budget.

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