The Estonian government kicked off state budget talks last week. Business owners say cuts should target not public services, but government bureaucracy.

"We've been consistently calling for major cuts to the policymaking apparatus — for some reason, nobody seems willing to listen," said Toomas Luman, chair of the Estonian Chamber of Commerce and Industry (EKTK).

"We're not talking about public services like fire, police, border control, healthcare or teachers," Luman clarified, noting that what they mean is things like ministries and central agencies.

"Right now, two things are strangling Estonia's economy: taxes — both the rates and the major confusion around them — and the terrible bureaucracy," he added.

Business leaders emphasized the need for stability to attract investment, particularly in startups and tech. They said entrepreneurs need predictable taxes and a clear near-term outlook, warning that without it some may abandon business altogether or move to countries with stronger support.  

"The fact that our energy policy is still undecided and chaotic hinders very large investments," said IT businessman and Estonian Founders Society board member Taavi Kotka. "And the damage from that is far greater than if we were to lay off three people from one agency or two from another."

He stressed that there is only one Estonia, "and we have to strike a balance to stay competitive with Greece, Portugal, France and other countries."

Longtime executive and vice president of the Estonian Employers' Confederation (ETK) Council Kai Realo said the first step should be abandoning activity-based budgeting (ABB), criticizing its lack of transparency.

"Estonian residents should understand what it means to take on this kind of debt — borrowing simply to pay out pensions," Realo said, warning that populism has led to the point where it's hard for regular people to grasp the real meaning of the state budget. "It's like taking out a payday loan to balance a household budget."

Cost control was highlighted for healthcare, education and social services, which have grown faster than the economy. Hando Sutter, CEO of the Estonian Employers' Confederation (ETK), cited the Estonian Health Insurance Fund (EHIF) budget doubling in seven years.

"If we took a modest first step, like making sure no budget item grows faster than the nominal economy — which is just under 5 percent — that would already be a clear goal," said Sutter.

Mari-Liis Jakobson, associate professor of political sociology at Tallinn University (TLÜ), said that in a democratic system, politicians have a responsibility to maintain public trust — not only in the system and state institutions, but also in politics and political parties themselves.

"If a situation arises where things are promised irresponsibly, this can undermine not only a party's ratings but also voters' trust in institutions," she warned.

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