Ligi said that Eesti 200's proposal to abolish the car tax was made as a reaction to the Reform Party's wish to cancel the planned income tax hike in 2026.

"Although everything seemed coordinated, the comment about canceling the income tax hike (by Prime Minister Kristen Michal – ed.) likely made the coalition partner feel left out. That was a reaction to the cancellation of the income tax hike: that the car tax should also be dropped," he told ERR on Wednesday.

The finance minister said, despite political mudslinging, it is understood in the government that taxes are rising temporarily and there is no long-term tax increase.

He called the car tax a "logical" step.

"We're actually facing a serious shortage of funds. The car tax is a very logical element in tax systems. It is simultaneously a tax on property and on environmental impact, and it is being introduced everywhere. Countries that are civilized, environmentally responsible, and have reached a sufficient level of wealth — we are talking about Europe — do implement car taxes. And they collect more in property taxes than we do. To simply say we are giving this [car tax] up, I would not have done that. And I do not currently see such an agreement in the budget that would allow us to give up that much, or that we have that kind of margin," the minister said

Ligi said that since the tax cut proposals have already been put forward, it will now be up to him as finance minister to rein them in. He repeated that there is no agreement in the government to eliminate any taxes.

"Everyone understands the difficult budget situation. It has already taken off in such a way that it should be considered. But if we shout out every possible consideration so openly, does that necessarily lead to a positive outcome? That's another matter entirely. In that sense, I'm not happy about how this debate has unfolded at all."

Ligi noted that, in private conversations, the car tax is acknowledged as a natural measure, despite public frustration.

"Despite the fact that political freeloaders latch onto it and criticize the government. The truth is, they do not have an alternative proposal. They are not suggesting cutting defense spending or slashing state expenditures even further. We've already become quite a lean state. We are about to raise defense spending fivefold compared to when the tax burden was the same 35 percent," said the finance minister.

Ligi pointed out that, at the same time as Eesti 200 wants to abolish the car tax, the interior minister — who belongs to the same party — has submitted additional budget requests amounting to billions.

"What kind of talk is this about abolishing taxes, when they have such ambitious plans? Every minister does. If we want to move in that direction at all, we simply cannot abandon taxes. Unfortunately, the current mindset in society is that taxes are evil and collected by someone for themselves. That's just not how it works."

Ligi added that Estonia is currently operating under the EU's loosened budget rules, due to a major agreement to sharply increase defense spending.

"We can no longer count on the U.S. Europe must take care of itself and, let's be honest, also of Ukraine. The U.S. no longer has the global ambition to be the spokesperson for the free world," Ligi said.

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