The suggestion comes after 97,000 people signed a petition calling for lower VAT on food. The government is against the move – calling it populist – but now appears to be trying to find a way to respond to the issue. Last week, the minister of finance suggested that next year's income tax rise could be suspended.

Estonia's subsistence benefit rate is €200 for a person living alone or the first member of a family, an additional €160 for each subsequent adult family member, and €240 for each child under the age of 18.

Pakosta told ERR the rate should be increased as medicine, clothing, and grocery prices have all risen sharply.

"This is about coping with life or not coping with life, and these people are all among us and beside us. These are people in real need, and their need for assistance has also been assessed by the local community," the minister said.

Granting benefits is made in cooperation between state and local governments and based on data, she said. One of the existing problems is that some people cannot manage the application process.

Pakosta said the system is being changed to a "personal-state solution" and in the future the state will "proactively" offer help to those in need.

"If you are in a very difficult economic situation and hovering around the subsistence threshold, it is genuinely difficult to follow all those bureaucratic steps and submit an application," she said.

The government sets the subsistence threshold each year and presents it to the Riigikogu for discussion.

"Therefore, a personal-state solution — meaning a simpler, faster, and more personalized provision of state services to those in need — is not only a technological possibility but, in my view, also the moral duty of the state," Pakosta said, adding that an analysis should be carried out to determine the correct subsistence threshold.

Analysis ongoing

The minister could not confirm if Eesti 200 will bring the proposal to the state budget negotiations next month.

She noted that, against the backdrop of rising food prices and in preparing for budget discussions, the party has discussed the need to raise the benefit several times, but Eesti 200's final positions for the negotiations have not yet been confirmed.

Minister of Social Affairs Karmen Joller (Reform) did not want to make concrete promises. However, she said that making the subsistence benefits system fairer and more needs-based is agreed in the coalition agreement.

"At the moment, we are analyzing various possible options and their financing models. I will certainly go into the state budget strategy negotiations with a more concrete proposal, and the final decision will be made there in cooperation with colleagues in the government," she said.

Joller added that, in cooperation with the Ministry of Justice and Digital Affairs, work is already underway to automate the data-based payment of subsistence benefits, which should be completed by the end of next year.

Who receives subsistence benefits?

The Ministry of Social Affairs said the number of permanent residents receiving benefits has remained stable in recent years. In 2024 and 2025, between 5,300 and 5,600 households received a payout each month.

"This indicates that although the economic situation has been difficult, there has not been an explosive increase in the number of benefit recipients among permanent residents. However, there has been a consistently high need among low-income families," said Ministry of Social Affairs media relations adviser Silvia Peets. 

Of these, over 60 percent are unemployed and rest are mainly families with children and single parents.

Additionally, about 2,000 households with temporary protection also receive the benefit. "The vast majority of whom have children and are often single-parent families," Peets said.

Last year, €39 million was allocated for benefits, but €0.3 million was unused. In 2023, €0.2 million of the planned €45.2 million was left unused, while in 2022, the €40.4 million earmarked for benefits fell short by €0.5 million.

Over time, the amounts paid out have increased: four years ago, the average payment per application was €270, while by last year, that figure had already exceeded €410 per month.

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