PM: Defense is top priority in state budget
When choosing between canceling the income tax increase and raising public sector salaries, the Reform Party prefers the former, Prime Minister Kristen Michal told ERR.
Minister of Education and Eesti 200 leader Kristina Kallas told ERR on Tuesday that her party's preference would be to raise the salaries of teachers, cultural workers, police officers and rescue workers. According to Kallas, Eesti 200 see the issue differently to coalition partners Reform.
Michal said his preference would be to avoid an income tax increase.
"Our partners are very strongly defending their positions, as all ministers are. I have set my number one priority as defense spending (as a percentage of GDP) and then, if possible, a reduction in income tax so that everyone's income would be higher /.../ I think we will reach an agreement," the prime minister told ERR.
Like Kallas, Michal also said that hopefully all agreements regarding next year's state budget will be in place by Thursday.
"Such agreements depend on many things – including what the budget limits are and what the budget situation is. We are basing our calculations on the rather conservative forecast from the Ministry of Finance, which may later turn out to be better /.../ and we are also basing our calculations on the framework coming from Europe – this means that defense comes first, number one, or five percent (of GDP). After that we will discuss salaries and the cancellation of tax increases, or income growth. All these things will be weighed up against each other," Michal said.
"There will be cuts in this budget and there will be cuts in the next budget. This means that the Estonian state has to do a lot of things at the same time, which is quite difficult if you want to increase defense spending and comply with European deficit rules, while also considering cutting out taxes so that you can leave people with more money in their pockets and raise wages a little in critical sectors. This justifies the total amount of the deficit," Michal said.
Michal opted not to say how much Estonia's national debt would increase by with the state budget, noting that the public will find that out next Wednesday when the budget is presented.
When asked what would be left undone if next year's budget were to have a 4 percent shortfall, or approximately €200 million less in spending, Michal said it would mean cutting back on some things that are necessary for life in Estonia.
"For example, €200 million [less] could mean not buying weapons, not implementing some of the income tax relief, not introducing the same salary increases in key sectors, not building Rail Baltica, or not investing an additional €70 million in roads. All of these things are essential for life in Estonia," Michal said.
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Editor: Michael Cole, Marko Tooming
