A year and a half ago, the Reform Party and Eesti 200 signed a coalition agreement in which they pledged, among other things, to reinstate the passenger shipping support measure to ensure Estonia's competitiveness with neighboring countries and protect thousands of jobs on Estonian ships.

"Without a similar measure, Estonian ships and jobs could sooner or later move to neighboring countries, which would mean a loss of nearly €54 million a year in tax revenue for our country. The support helps keep costs under control, preserve jobs and keep tax revenue in Estonia," Minister of Infrastructure Kuldar Leis said a few months later in a Ministry of Climate press release.

In the end, however, the Riigikogu decided last year not to reinstate the support measure. This was largely because Reform MP Mart Võrklaev said he would support lowering the remote gambling tax in a Riigikogu vote only if the government dropped the passenger shipping support measure.

The support measure nevertheless remained in the state budget strategy at the time, meaning the government had still factored an annual expenditure of €10 million to support passenger shipping into its future plans.

The passenger shipping support measure was officially removed from those future plans only at the beginning of this week when the government agreed on a new state budget strategy.

For example, documents accompanying next year's state budget bill state that not continuing the passenger shipping support measure will save nearly €10 million a year from 2027 through 2030.

Tallink: Jobs in jeopardy

Tallink CEO Peep Jalakas said the government's decision not to continue the passenger shipping support measure in the coming years is not good for either Tallink's sustainability or the Estonian maritime sector more broadly.

Jalakas said Tallink is constantly considering whether to move any of its vessels away from the Estonian flag and the decision not to continue the measure makes that more likely.

"This could put both jobs and the long-term future of Estonia's maritime sector at risk," Jalakas said.

The Seamen's Independent Union of Estonia said a year ago, for example, that Tallink could move its ferry Victoria away from the Estonian flag, along with 300 jobs.

Jalakas declined to say how likely Tallink is to move any of its vessels away from the Estonian flag.

"We certainly won't rush into making any hasty decisions. We still hope that, ultimately, the final decisions will ensure that Estonia's maritime policy is long-term and sustainable," he said.

Both Jalakas and Jüri Lember, head of the Seamen's Independent Union of Estonia, acknowledged that the situation in the maritime sector has become more difficult.

"Fuel costs, particularly for marine fuels, have nearly doubled compared with the beginning of the year. On the other hand, since the beginning of this year, the entire passenger shipping sector has also been subject to carbon taxes, which adds millions of euros to our costs. This combination, in which costs that we cannot influence are rising, puts us under increasing pressure to consider different ways of optimizing costs," Jalakas explained.

"Very simple calculations have shown that just one vessel would already take away around €10 million in tax revenue. Those people probably wouldn't change their place of residence, but these are large sums that should be known and taken into account when entering numbers into an Excel spreadsheet," Lember said.

Minister: We want to put together a new maritime support measure

Infrastructure Minister Kuldar Leis said that ultimately, it is up to Tallink itself to decide how to proceed.

"We are in constant contact with maritime companies and the goal is for us as a country to remain competitive. On the other hand, we know the state of our national budget and what we need to do to reduce the deficit. In every area, we have to cut back on the one hand while looking at how to remain competitive on the other," he said.

Leis said the ministry still wants to support the maritime sector, but in a somewhat different way. Specifically, Estonia is seeking state aid approval from the European Commission so that companies using more environmentally friendly fuels could receive financial support from the state budget in the coming years.

"If we receive that approval, the plan is to once again seek funding from the state budget for the following years," Leis said.

Leis said the Ministry of Climate currently expects the support for environmentally friendly fuels to be roughly the same amount as was planned for the passenger shipping support measure last year, or about €10 million a year.

"The entire transport sector is becoming more environmentally friendly and Estonia is moving in that direction in every sector. This is most evident in the car market where electric vehicles are becoming increasingly common. Similarly, the Tartu and Narva rail lines are being electrified. Just as other areas of transport are moving toward more environmentally friendly fuels, so is the maritime sector," Leis explained.

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