You increasingly hear the question across Estonia: Why isn't the city or rural municipality doing anything to solve this or that problem? Why aren't roads and streets improving, why isn't public order being maintained, why aren't teachers or kindergarten staff receiving decent pay? Why does it feel like even larger municipalities, such as Tallinn or Tartu, are powerless when it comes to even the most basic issues?

This may sound unexpected coming from an opposition politician, but the issue isn't that the "wrong" city or municipal government is in power, or that the local leaders are incompetent or foolish. The real reason lies in a deeper structural problem: Estonian municipalities do not have enough tax revenue under their own control.

Under the current system, the majority of income tax and all other taxes flow directly into the central government's budget, which means that local governments essentially live off pocket change. And even then, they don't get to decide how it is distributed.

According to Section 154 of the Estonian Constitution, local governments "shall independently decide and organize all local issues." The same section also states: "Duties may be imposed on a local government only by law or with the local government's consent. Expenses related to state duties assigned to a local government by law shall be covered from the state budget."

If a local government cannot independently determine how and for what purposes to use the tax money collected in its region, then what are we even talking about? There can be no real freedom without budgetary autonomy. While there could always be more money, the issue isn't necessarily that local governments need a larger piece of the state budget.

The issue lies in the right to direct their own funds. Municipalities should have a larger share of income tax or a real ability to levy regional taxes (such as property, tourism or business taxes) that reflect local priorities. This does not mean increasing the overall tax burden — municipalities could choose which taxes make sense in their area.

So this is a matter of fairer and smarter distribution, where what is earned locally also stays local and helps improve local living standards. A good example is the care reform initiative, which may sound sensible on paper, but its implementation was offloaded onto municipalities. As you may recall, this pushed the City of Tartu into a legal battle with the state — a case that is still ongoing. When the state delegates responsibilities but not funding, that's not a partnership; that's a chain of command. And as we can see, it's a poorly functioning and reluctant one at that.

Of course, the issue isn't one-sided, and it would be naive to blame Toompea for everything wrong with local government financing. Often, municipalities themselves struggle to direct their own funds wisely. In Tartu, significant resources have been spent on questionable projects such as the Siuru initiative or hydrogen and space projects, or the bike street. All of these are interesting ideas, but they raise important questions: at whose expense and why?

Frequently, this comes back to a lack of budgetary independence. It forces municipalities, at times, to rush decisions or proceed in the hope of putting pressure on budget gatekeepers in Toompea: look, we've started this project using municipal funds — now be so kind and take over. But that's a temporary fix, not a long-term strategy.

It doesn't help foster trusting relationships or responsible financial planning. And when the mayor of Tallinn, Tartu or Pärnu has to go to Toompea to ask for money for every major project, what we have are not municipalities but sub-agencies — something that certainly doesn't align with Section 154 of the Estonian Constitution, which states, among other things, that municipalities "shall act independently in accordance with the law." If a municipality cannot invest in the future of its people, it cannot be held accountable either — because it lacks control and understanding.

This is not a partisan issue. Tax autonomy isn't red or blue, right-wing or left-wing, liberal or conservative. It is a completely practical question about how the Estonian state actually functions and whether we follow our own Constitution or not.

If we want local life to flourish, we must trust those who understand local conditions and give them the ability to take responsibility for their own affairs. And for that, financial capability is essential. Tax autonomy doesn't mean dismantling the state — it means strengthening it. Strong municipalities make for a strong country. The question is simple: do we trust people to make decisions for themselves or not?

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