Opposition Accuses Estonian Government of Borrowing to Fund Promises in ERR Debate
In an ERR studio debate, Estonia's coalition parties said the budget deficit is being reduced, while the opposition argued the government is borrowing to deliver on its promises. The discussion also covered the income tax exemption, Rail Baltica spending and the tax system.
Estonia's coalition parties claimed during an ERR studio debate that the state budget deficit is shrinking, while opposition politicians countered that the government is financing its promises with borrowed money. Taking part were Erkki Keldo (Reform Party), Lauri Laats (Center Party), Riina Sikkut (Social Democrats), Rain Epler (EKRE), Aivar Kokk (Isamaa) and Toomas Uibo (Eesti 200).
The deficit target
Host Andres Kuusk recalled that the Reform Party had pledged to cut the deficit by 0.5 percentage points each year, yet the goal would not be reached in the coming years. Keldo insisted the deficit was still falling: the forecast for next year had dropped from 4.9 percent in spring to 4.4 percent in summer, and the government's submitted budget foresees 4 percent. He credited continued spending cuts, saying about €1.5 billion in additional cuts had already been made.
Opposition criticism
Kokk accused the government of hiding expenditure in the budget. He criticized the second supplementary budget sent to the Riigikogu, saying costs were being pulled forward from next year, including €28 million for Rail Baltica rails with no clarity on where they would be used. He also argued that the income tax exemption was being paid for through debt this year and next.
Laats called the budget now being drafted a disaster and urged a full overhaul of the tax system. He criticized the heavy reliance on consumption taxes, which he said make up 40 percent of tax revenue, and said the Center Party would lower them, especially VAT on food.
Epler said Estonia has a spending problem and that more could be cut. He noted that the state budget had grown by over 50 percent in five years, while GDP rose by only 4 percent.
Social Democrats' position
Sikkut said her party would not engage in political blackmail when deciding whether to back the budget. She stressed that some spending, such as specialized care services, is not ideological, citing a Supreme Court ruling that a lack of funds or places does not relieve the state of its duty to guarantee fundamental rights. The Social Democrats plan to propose amendments to support vulnerable groups.
She also argued that the cuts exist only on paper because some costs were shifted into future years, and that the government is not complying with budget rules requiring a 0.5-point annual improvement. Keldo maintained that scrapping the income tax "hump" was the right decision.
Uibo hoped future governments would keep cutting the deficit by 0.5 points annually, which he said would eventually stabilize the national debt. The debate also touched on excise tax increases.
