Parliamentary parties clash over Estonia’s budget deficit

Estonian parliamentary parties clashed over the state budget in a debate on ERR’s First Studio programme. Coalition representatives said the government was reducing the deficit, while opposition politicians argued that its promises were being funded with borrowed money.

The debate featured Erkki Keldo of the Reform Party, Lauri Laats of the Centre Party, Riina Sikkut of the Social Democratic Party, Rain Epler of EKRE, Aivar Kokk of Isamaa and Toomas Uibo of Estonia 200.

Programme host Andres Kuusk noted that the Reform Party had promised to reduce the budget deficit by 0.5 percentage points each year, but that this would not happen in the coming years. Keldo said the deficit was still being cut. He said forecasts had put next year’s deficit at 4.9 per cent in spring and 4.4 per cent in summer, before the government submitted a budget projecting it at 4 per cent. Keldo added that the government had made additional cuts of around 1.5 billion euros.

Kokk called the budget “a hidden budget”, arguing that spending was being shifted into the following year. He cited 28 million euros allocated to buy rails for Rail Baltica, saying it was unclear where they would go. He also said the government was using loans to fund the Reform Party’s income-tax relief pledge.

Laats described the budget under preparation as a disaster and called for an overhaul of the tax system. He said 40 per cent of tax revenue came from consumption taxes and that the Centre Party would lower them, particularly VAT on food.

Sikkut said the Social Democrats were not using political pressure to secure support for the budget. She highlighted spending on special care services, saying a Supreme Court ruling had recognised that funding and places might be lacking but did not release the state from its duty to protect people’s fundamental rights. The party would propose changes to support vulnerable groups and was seeking backing from both the opposition and the coalition, she said.

Uibo said he hoped future governments would continue reducing the deficit by 0.5 percentage points a year, so that government debt could eventually stabilise and begin to fall. He said such a reduction could not be achieved in a single year and that even a 0.5-point cut had been difficult.

Epler said the state had a spending problem and accused the Reform Party of increasing expenditure. He said the state budget had grown by more than 50 per cent over the past five years, while gross domestic product had grown by only 4 per cent.

Sikkut argued that the government had reduced spending only on paper and shifted some costs into future years. She said the previous year’s planned income-tax increase had been intended to cover the abolition of the income-tax “hump”, but that the increase was abandoned using borrowed money.