The Social Democrats have previously brought up the idea of reducing VAT on essential food items in coalition discussions, and in theory, it is the right idea, Kallas said.

"As a general principle — lowering taxes during an economic downturn is not theoretically a wrong decision. But there is a big 'but' — the state budget and the way we have managed public finances for nearly 30 years indicate that we cannot do this. Our budget is not structured in a way that allows us to stimulate the economy during a downturn because we always spend any extra funds during good times," Kallas said.

According to Kallas, the state's finances are completely depleted and a party responsible for governing should not make promises that are not feasible.

"We cannot do this when the state's coffers are not just empty but in the red. It would be irresponsible to make them even emptier by taking out more money. Not to mention that we still have unresolved defense spending issues. The Social Democrats need to show their voters that they are standing up for affordability, but in the bigger picture, while bearing government responsibility, decisions cannot be made that further deplete the budget," Kallas said.

Kallas also expressed skepticism that such a VAT reduction would lower food prices.

"People would not actually benefit from it — reducing VAT on food items might have an effect for a month or two, but then prices would rise back to where they are today. If the market currently allows retailers to charge these prices and people are willing to pay them, then sooner or later, prices will return to the same level. It's a matter of supply and demand in the market," Kallas remarked.

At the Social Democratic Party's council meeting in Tartu on Sunday, party leader Lauri Läänemets stated that the government's responsibility should be to find solutions to lower food prices. This could involve reducing VAT on essential food groups — fruits and vegetables, dairy, meat, grain and fish products — to 9 percent.

Finance Minister Jürgen Ligi (Reform) also opposed the proposal, arguing that the biggest beneficiaries would be wealthier consumers and retailers.

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

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