Education Minister Kristina Kallas said her preference is to raise the wages of teachers and other public sector workers. However, the Reform Party wants to reduce income tax instead.
Michal says that for him, the most important thing is the defense budget (5% of GDP). After that, he would like to reduce income tax if possible, so that people have more money.
Michal hopes that by Thursday, the agreements for next year's budget will be ready. He says the agreements depend on many things, such as the state of finances.
Public sector wage increases are important, but the state does not have enough money for everything. According to European rules, the budget deficit must not exceed 4.5%.
Michal says it is difficult for the state to do everything at once: increase defense spending, follow European rules, reduce taxes, and raise wages. This explains the large budget deficit.
If the budget were 200 million euros smaller, many things would remain undone. For example, weapons would not be purchased, income tax would not be reduced, or wages would not be raised. Even Rail Baltic construction or funding for roads could be left out.
Michal does not say how much the state's debt will increase. The public will find out on Wednesday when the budget is presented.