At a public session of the Riigikogu's State Budget Control Select Committee, lawmakers pressed the government over its recent claim that the state budget would improve by €800 million this year.

"Compared to the information the state had this spring — in April — the deficit has decreased not by €800 million, but by only €200 million," said committee chair MP Urmas Reinsalu (Isamaa).

Finance Committee chair MP Annely Akkermann (Reform) agreed, noting that "the spring forecast was already €600 million better than the 2024 summer economic forecast that underpinned the original 2025 budget."

She also recalled that after the spring forecast, the Reform-Eesti 200 government — which had by then kicked the Social Democrats (SDE) out of the ruling coalition — decided not to implement the planned 2 percent corporate income tax, originally set to take effect in 2026.

"The difference between the spring and summer forecasts [finalized in August] reflects that the Ministry of Finance takes changes in the law into account when drawing it up," Akkermann added.

Reinsalu argued that announcing the tax in 2024 and then reversing it this year likely prompted companies to accelerate dividend payments in 2025, temporarily boosting revenue but undermining broader economic confidence. "While walking back the tax is a positive step, the damage has already been done," he said.

State Auditor Janar Holm, who also attended the session, cautioned that even with the €800 million adjustment, "in 2026 ... the budget position will still be minus 4 percent of GDP," and additional coalition spending could push that shortfall beyond €1.6 billion.

Hando Sutter, CEO of the Estonian Employers' Confederation (ETK), welcomed the cancellation of the 2 percent corporate tax, but acknowledged the episode highlights inconsistency and unclear signals in Estonian tax policy, which harm the business climate.

2024 budget carryovers

Lawmakers also debated €1.7 billion in unspent 2024 funds proposed for transfer into the 2025 budget.

Reinsalu said the committee wants clarification on whether any carryovers were already spent in the first half of 2025. Akkermann also warned that transferring the full amount would artificially inflate the 2025 budget, effectively counting the same money twice, though Reinsalu acknowledged that some carryovers — such as in construction — are legitimate.

While Reform MP Kristo Enn Vaga noted that the ministry had proposed meeting next Monday, September 8, other committee members expressed regret that no Finance Ministry officials attended the session, despite being offered three potential meeting times this week.

Reinsalu said the committee will submit additional followup questions to the ministry before their next session.

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