Sikkut blames tax-hump removal for Estonia’s budget problems
Tuesday 29th September 2026 on 07:00 in
Estonia
Removing the tax hump is at the root of Estonia’s budget problems, Social Democratic Party deputy chair Riina Sikkut said, according to ERR. She said the decision had tied the government’s hands and could not be changed by the opposition at this stage.
Nearly 800 million euros spent on removing the tax hump and cancelling a planned income tax increase were covered by borrowing, Sikkut said on the television programme Terevisioon. She argued that teachers, rescue workers, healthcare workers and special care services were paying for the tax cut, calling the outcome unfair.
Sikkut said the government had tried to keep the deficit at 4 percent by shifting some spending into the current year and delaying other costs, including spending on the Rail Baltica construction. She said she would not support a deal in which the Social Democrats helped pass the budget in exchange for measures they favoured.
She said the biggest concern for her was healthcare, particularly special care. A Supreme Court ruling says waiting lists of two years for people with psychiatric special needs are unacceptable, but Sikkut said the budget contains no funding to address the problem or comply with the ruling.
Sikkut said a solution would have to come after next March’s elections, when a new government takes office. She said the state budget would certainly be revised after the parliamentary election.
She also warned that the country’s debt and interest costs were rising. Annual interest payments had increased from 20 million to 30 million euros a few years ago to 200 million to 300 million euros now, and could exceed 600 million euros in four years, she said. Sikkut said that amount could address funding pressures in healthcare and special care, as well as pay concerns among teachers, police officers and rescue workers.
She said the new government would face the challenge of balancing the budget, and argued that borrowing should not be used to cover recurring costs such as pensions and salaries. Such spending, she said, should be covered by recurring revenue, including fees, taxes and environmental charges.