"I won't leave anything for Reinsalu," was how Prime Minister Kristen Michal (Reform) recently summed up his fiscal policy maxim. Let me paraphrase that: "After me, the flood." That, quoting Louis XV, is the central message of this budget.

So what are the core problems with the budget?

First, there's a total lack of any political approach to curbing inflation. Quite the opposite — the budget increases inflationary pressure. Due to the government's tax policy decisions, Estonia has become the inflation driver of the European Union. Yet the government sits idly by — worse still, it is accelerating inflation through its tax moves.

Inflation can be quickly curbed, above all, by easing the burden of indirect taxes and reducing administrative costs.

At a recent government press conference, ministers proudly claimed how much they had reduced administrative expenses. Prime Minister, you even stated that ministry costs were being cut in line with the pay raises of frontline workers.

Let's stop lying to people and actually look at the numbers. The comparison baseline is the 2024 budget, as that's when you promised to start cutting administrative costs. The definition of administrative costs is one your administration provided — wage costs, operating costs and so-called other support.

In 2024, wage and operating costs totaled €2,615,464,000 in the budget. In this year's budget, the figure is €3,095,451,000. That's an increase of €480 million.

What about other support measures? In 2024, total spending including investment support was €4,344,472,000. For 2026, the budget foresees €5,736,921,000. That's a €1.4 billion increase.

If we keep cutting the way you do, the state will go bankrupt. On top of that, you quietly transferred €418 million in administrative costs from last year to this one. A total of €2.1 billion in the previous year went unspent.

The second deception lies in stockpiling undefined money in the budget strategy for the period after the 2027 elections. I asked about this in Wednesday's Q&A session, but received no intelligent answer.

Here are a few examples:

In 2028, the plan is to roll out some sort of undefined needs-based support system, which, according to the national budget strategy (RES), is projected to bring in €200 million in revenue after the elections. Then there's an investment audit projected to yield €100 million. What are these actually?

You've also quietly included the implementation of the ETS2 system in the national budget — that's essentially a new fuel tax — amounting to €330 million in the strategy. Again, this only comes after the elections. The Health Insurance Fund deficit is projected to reach €300 million.

The fundamental issue is the rising debt burden. From less than €8 billion in 2023 to nearly €18 billion by the end of 2029. In reality, the debt load will rise even faster if we consider how inflated the budget strategy actually is.

The Reform Party's talk of sound public finances has become meaningless. According to the Fiscal Council's opinion, there's not a stone left unturned in the budget. The Council flatly states that you're planning to override all domestic fiscal rules — making the Council itself pointless, since its job is to assess compliance with those very rules.

The strategic problem is that everything is being put on hold. This is happening at a time when the attractiveness of Estonia's business environment has been systematically undermined. And yet, under these conditions, you're still shoveling endless amounts of money into green transition projects — projects that are irrational in light of the ongoing energy chaos and uncertainty surrounding the green transition.

We need a longer-term fiscal perspective — beyond four years — especially given the need for sustained defense funding.

The increase in defense spending is necessary, but it's equally important to restore public trust in how funds are managed. There's a separate issue regarding the manipulation of figures through backloading. The summer development plan prepared by the Ministry of Defense, based on the chief of defense's military advice, called for different funding numbers. But in government, these figures were reworked to delay €240 million in defense spending to the post-election years of 2026–2027.

The budget contains a fundamental precedent in fiscal policy — something no Estonian government has ever done before: it's fulfilling an election promise with borrowed money.

You're running ads boasting how much money people will have left over. In reality, you've already taken that money from Estonians through VAT hikes, income tax hikes and triggering a price spiral. Just this year, the average earner will lose the equivalent of one month's salary. It is comical to advertise the cancellation of a tax hike as a financial gain for the people. By that logic, any government could turn everyone into a millionaire overnight.

The stop-and-start nature of your tax policy continues. In July, you raised VAT, pushing prices up again — completely ignoring Isamaa's substantive warnings. Just a month ago, you promised to scrap the car tax, and yet people were deceived once again.

In the face of a demographic crisis, your only answer is to import thousands of low-paid workers — at the same time birth rates have plummeted by a similar amount in recent years. After us, the flood.

The government's budget is framed by confusion surrounding the state budget itself. This isn't just a legal technicality. According to the chancellor of justice and the National Audit Office, it's an unconstitutional situation. And you're planning to further reduce the Riigikogu's control over state budget allocations. This fosters confusion in budget management. Last year alone, €2.15 billion went unused.

The Estonian economy is stagnating. The government forecast 3.3 percent economic growth for this year; the reality is 0.9 percent — and two-thirds of that is due to tax hikes. Why? Because economic confidence is low — both among businesses and consumers.

According to a summer survey by SEB bank, more than half of people are using their savings just to get by. Amid the tax chaos you created in 2024, World Bank data shows Estonia was the only Baltic Sea EU country with a net outflow of foreign investment — $3.5 billion — while, for example, Lithuania saw a similar inflow. That's the real situation. Why?

In July 2024, the prime minister announced a temporary corporate income tax, an additional 2 percent income tax and a 2 percent VAT hike — all temporary, he said. But just a couple of months later, he said those taxes would be made permanent. Now, he's dropping the income tax hike and advertising it as a tax cut that leaves people with more money. In this kind of confusion, investors rightly look at the business environment and say: we can't trust it.

More tax hikes are on the way. In October, land tax and the second installment of the car tax will come due. Creating a permanent debt spiral does not build wealth; it creates a false sense of security. Delaying meaningful decisions just makes it harder for society to solve its problems later on.

This commentary is based on remarks made during state budget handover negotiations in the Riigikogu.

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