Reform reciprocates Centre challenge with tax cuts and other promises

Kaja Kallas speaking at the Reform Party conference on Saturday.
Kaja Kallas speaking at the Reform Party conference on Saturday. Source: Anna Aurelia Minev/ERR

The Reform Party had its pre-election conference on Saturday evening, preceded by a party board meeting, with both convocations providing plenty of policy and vision pronouncements. Centre had already held its conference earlier in the day; the Free Party also held its own conference on Saturday.

"I'm giving you three reasons to vote for Reform Party,'' said party leader Kaja Kallas in a speech on Saturday evening.

''The Reform Party will ensure that Estonia won't get self-absorbed, but instead will be open and move forward on the right course. The Reform Party will ensure that freedoms, not the state, are in first place in Estonia, that Estonia is a country where striving for a better life is facilitated, not punished, where everyone has possibilities to develop and where the tax system is simple and fair. Never has the Reform Party compromised on important topics ‒ national interests, security, continuity of tax policy. We will not do so in the future either. You can be sure about our chosen direction," she continued, at the end of her speech.

The party, which is not in office though it is the largest in terms of Riigikogu seats, had taken a middle line on the recent UN Global Migration Compact, an issue which split the Government in November. Taxation reform is a lynchpin component of its platform.

Secretary-General pits Reform against Centre

Secretary-General of the party Erkki Keldo echoed Ms Kallas' comments and was clear to set out the party as a viable alternative to the ruling coalition majority Centre Party.

"The Reform Party bases itself on a strong middle class; together we have been building up the state, yet this is the group the present government and its tax system punishes the most,'' Mr Keldo continued.

''We need to talk about working pensioners, teachers, engineers, doctors, nurses and industrious people of Estonia in many other professions," he added, claiming today's tax system punishes such people by taxing at 30% everything they earn in excess of the national minimum wage.

''Whereas in opposition, Centre always promised higher pensions, lower prices and better wages, in fact in the course of two years we lost €340 million in tax revenue, received the highest excise duties, saw the fastest rate of inflation in Europe and saw higher taxation on the most industrious people,'' Mr Keldo reportedly said.

Kaja Kallas herself echoed the inflation statistic and in part blamed Centre's excise hikes: "Price rises do not depend solely on excise duties of course, but this price rise nevertheless has been driven by the Centre Party's excise duty policy," she said. 

Reform candidate list in place

The party also used the opportunity to endorse its 125-strong candidate list for the 3 March elections. The list places Ms Kallas, former government minister Jürgen Ligi, former party chair Hanno Pevkur and erstwhile foreign minister and current MEP Urmas Paet in the top five candidates, together with former olympic skiier Kristina Šmigun-Vähi. The list reportedly is rounded off by Jüri Ratas' predecessor as PM, Taavi Rõivas, and European Commissioner Siim Kallas, also a former PM, and father of Kaja.

Elaborating on Reform's tax policies, Ms Kallas stated that Estonia's economic success post-independence had been based in no small part on this area.

''That taxes have been low and the tax system simple and fair has brought many jobs here and left more money in the hands of the people. But in just two short years, the Centre Party has managed to make this system confused and unfair. We will make the tax system more simple and fairer, with €500 tax-free income [presumably per month-ed.] and a level rate for all," she said, implying a move back to Reform's bedrock approach to taxation.

Tax reform discourages hidden economy

"I want to live in a country where courageous attitudes and initiatives are held in esteem and where a worker will not even think about asking for a portion of their pay increase or bonus in an envelope, because earning more is not punishable,'' she continued, effectively arguing that higher taxes encourage the hidden economy.

''On the contrary, the more money is left in people's hands this way, the richer will be the whole of society and the more we can help those who genuinely need it," she continued.

In addition, Ms Kallas highlighted the Reform Party's focus on innovation, and the party's wish that the state's contribution to research and development would rise to a level equalling one percent of GDP. Estonia also must engage in smart foreign economic policy to facilitate the development of the country's businesses.

Conversely, kindergartens should be on the state

At an extended party board meeting also on Saturday, Reform opted to add the abolition of kindergarten fees to its manifesto, despite its otherwise general tendency towards classically free-market policies.

"We have agreed as a society that we attach value to the raising of children,'' Ms Kallas said on the issue.

''With the parental allowance, we will provide families with a feeling of security during the first years after a child is born. Reform Party governments have raised the child allowances and introduced the allowance for families with many children. Yet we have one phase in the life of a child that parents must pay for. This is the point at which a child goes to kindergarten and parents must start paying the kindergarten placement fees The more children, the more expensive this is. The state shouldering the share of the parents is thus the right signal to mothers and fathers," she commented, according to party spokespersons.

The move should save one-child families €671, and families with two children €1,342, per year, it is claimed.

Free Party also promising tax changes

Reform was not the only party busy recently offering tax cuts to the electorate ahead of the 3 March elections.

The Free Party, which currently has around half a dozen seats at the Riigikogu and is in opposition, has promised a reduction on personal income tax to 12%.

The shortfall in collected tax would be made up by an equity tax on businesses of no more than 1%, said party leader Kaul Nurm at the party conference which took place on Sunday, shifting the tax burden more towards profits, he said.

Whilst Mr Nurm was not unrealistic about the party's electoral prospects – it has seen two changes of leadership in 2018, a haemorrhaging of party members to a level perilously close to the 500 threshold needed for legal registration as a party, and draining support, if opinion polls are to be believed – but he stated that it would aim to fulfil a 'kingmaker' role on the right-wing of parliament, fielding a full list of candidates.

Mr Nurm also highlighted the party's rural policy.

"We have a very specific vision on how to provide more than 3,000 farming households and entrepreneurs with meaningful and profitable activity round the year," he said.

Reform's criticisms of Centre in fact reciprocated comments made by the latter's leader, Prime Minister Jüri Ratas, who earlier in the day on Saturday presented the forthcoming election as a straight choice between the two largest parties, making the likelihood of a deal between the two entering into coalition together look, at least at this stage, more remote.

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Editor: Andrew Whyte

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