Center Party head: Budget surplus news not as stellar as it sounds

This year's state budget surplus of €800 million is not as good a piece of news as it may first seem, because the extra money did not come from economic growth, Center Party leader Mihhail Kõlvart said.
"That money didn't suddenly appear out of nowhere — it was collected from the pockets of Estonian people and their employers at a time when they were struggling just to get by. It's just enough for ministers to promise carrots in support of their election campaigns, but such carrots are always followed by the stick after elections, and our people don't deserve that," Mihhail Kõlvart, head of the opposition Center Party, wrote on social media.
He recalled that only on Tuesday both the state and two major banks published their economic forecasts, all of which clearly showed that this year's economic growth fell well short of expectations.
"A year ago, the Ministry of Finance forecast real economic growth of 2.1–3.3 percent for this year. In reality, growth is practically zero — just 0.8 percent. If the projected growth didn't happen, yet somehow €800 million was left over, then a much more serious question arises: what is the quality of our state's financial management and how accurate are these calculations if such a large sum can just 'left over' out of nowhere? And also, how reliable are today's forecasts for the future? These numbers simply don't add up, and the reason may be even more cynical than simple incompetence."
According to Kõlvart, he already warned after the Riigikogu elections, when the government announced tax hikes, that taxes should not be raised during an economic downturn, because it only deepens the recession.
"This was not my original idea — it's a golden rule of economics. I proposed instead taking out loans, both for countercyclical investments and to cover defense spending, because that would have kept the economy moving and allowed the recession to pass more quickly and with less pain. The government disagreed. Now the government has ended up in the same place — that loans must be taken and tax hikes canceled. But the government has waited so long to take these basic steps that in the meantime our people have suffered through more than two years of recession, businesses have shut their doors and unemployment has risen."
The Center Party leader stressed that the tax increases are only a way to collect money for temporary handouts before elections, which are then taken back immediately afterward.
"That's exactly what happened before the 2023 Riigikogu elections. Just before the vote, the child benefit for a third child was increased, people were promised that taxes would not rise and forecasts claimed the green transition would make our country wealthy. Immediately after the elections, however, the third-child benefit was rolled back, unprecedented tax hikes were introduced, a car tax was imposed and to this day billions in state subsidies are being pushed for privately owned wind farms, which would lock us into high electricity prices and questionable energy security for a long time to come."
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Editor: Urmet Kook, Marcus Turovski










