Prime Minister Kristen Michal said that if tax revenue is good, the government can postpone the income tax increase. Social Democrat Lauri Läänemets disagrees with this. He says it is a big mistake.
Läänemets says the idea of the security tax was that all individuals and companies would pay. Now only VAT remains, which affects the poor more. Thus, only the poor pay for national defense.
He says that Estonia's tax system benefits the rich more. Postponing the income tax will make this even worse. The rich save, while the poor pay more.
Läänemets says that the state budget is in bad shape. The reduction of corporate income tax has harmed the budget. Good tax revenue will not improve the situation.
Estonia cannot save money by 2029. Nearly one billion euros need to be found. Currently, the government is adding more deficits. Economic growth will not help. EU funding is running out.
Large budget cuts will reduce services. People will have to pay more themselves. This will affect everyone, especially the poor.
The 2024 coalition agreement envisioned increases in VAT and income tax. In 2025, the Social Democrats were ousted from the government.