On Monday, former finance ministers Aivar Sõerd and Mart Võrklaev, both members of the Reform Party, did not support this year's supplementary budget in the Riigikogu Finance Committee. ERR asked Prime Minister Kristen Michal (Reform) whether this means Estonia effectively has a minority government.

"The answer to the question of whether is very simple — no!" Michal replied.

According to Michal, how Sõerd and Võrklaev vote in the final reading is up to them. He explained that his fellow party members and former finance ministers would like to see a larger improvement in the budget position than the supplementary budget provides.

Michal said that major changes and spending cuts will be made as part of the state budget and the State Budget Strategy, which will be drafted over the summer. In financial terms, he said, the supplementary budget is extremely small in scope.

"When the budget is drawn up in the fall, their support will be there. I think they've already said themselves that they have absolutely no intention of breaking up the coalition."

In light of developments in the Finance Committee, ERR also asked what the prime minister makes of media speculation that has circulated for some time claiming several coalition MPs have already decided to switch parties but are waiting to announce it publicly. As a specific example, they asked whether Michal could rule out Aivar Sõerd joining the Parempoolsed party.

According to Michal, there has been talk since at least the end of 2023 that the governing coalition is about to collapse and that coalition MPs will defect.

"There's more of that spin going around Estonia than just about anything else. So let it circulate, but people get tired of hearing that everything is falling apart."

Michal added that he is completely confident in his team, by which he means both the Reform Party and Eesti 200.

"It's not unprecedented for a country to be governed by a minority government. Estonia has had one before and managed just fine. But I'm confident in my team. Of course, I understand that political rivals have an interest, as summer approaches, in creating uncertainty through editorial offices and spreading these kinds of stories. The goal is very simple — to create the impression that nobody knows what might happen."

Michal said it is natural to criticize the government, but added that the media could also ask opposition leaders what their concrete plans are for financing all the generous promises they are making.

Customers would end up shouldering a banking tax

Asked what he thinks of comments by Reform Party founding member Rein Lang who believes the government will scrap the motor vehicle tax rather than leave that decision to Isamaa and the Center Party, whom he believes are likely to win the next elections, Michal replied that Lang is not responsible for managing Reform Party voters' expectations and that he is an independent, free and liberal thinker who should be respected as such.

"Any changes can only be decided on and communicated by those who actually make those decisions — parties, governments, parliaments and members of parliament. But for now, I would say that the tax burden, which is around 35 percent after the tax cuts introduced at the start of the year, is optimal."

According to Michal, the motor vehicle tax is essentially a property tax, and in the end, if one tax is abolished, the money will still have to be collected elsewhere.

"I'll give just one example. Does anyone really think there are some imaginary bank taxes that are paid by banks or bankers? In the end, all of that comes from us as customers. If a Center Party politician appears before you with a booming voice and says, 'We'll take that money from the banks,' then friends, we'll be the ones going to the bank and paying for it through service fees."

Michal added that every euro collected through the motor vehicle tax will go toward road construction over the next four years, amounting to a total of €380 million.

Higher education in need of extra funding

ERR also asked who, if anyone, stands to receive additional funding from next year's state budget and by how much. Michal replied that the budget will require spending cuts and a reduction in the deficit. If one area receives more money, he said, something else will have to give.

"That's how budgets are always made. It's no different from a person's private life. If you want to spend more in one place, you have to cut spending somewhere else."

He cited higher education as an example, noting that universities have requested additional funding because more young people are expected to enroll in the coming years.

"I'll say it plainly: It's better to put that money into higher education than to erect two buildings. I think that's a sensible principle, but that means we have to decide which two buildings we won't build. That's exactly the debate the government is having — that's what governments do."

Asked about the major reforms the government still hopes to complete, Michal pointed to plans to allow people to use their second-pillar pension savings as collateral when purchasing a home.

Michal also confirmed that he supports postponing the implementation of the European Union's new emissions trading system, ETS2.

Talking about the Rail Baltica railway, the construction of which has been delayed in Latvia, Michal said Estonia and the other countries involved must complete their sections of the railway on schedule. He added that Latvia is under significant pressure from both other countries and the European Union. Michal said he does not consider it likely that Latvia would abandon the project altogether, as doing so would require the country to repay all the funding it has received from Europe.

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