State finances
Session: Fifteenth Riigikogu, sixth sitting, press briefing.
Date: 2025-09-17 15:17
Participating Politicians:
Total Speeches: 22
Membership: 15
Agenda Duration: 16m
AI Summaries: 22/22 Speeches (100.0%)
Analysis: Structured Analysis
Politicians Speaking Time
Politicians
Analysis
Summary
A second question was put to Prime Minister Kaja Kallas, with the discussion focusing on the state’s finances and the tax system. Member of the Riigikogu Lauri Läänemets posed a critical question regarding the regressive nature of the tax system, pointing out that the burden is greater for those with lower salaries compared to those with higher salaries. He argued that the abolition of the tax bracket and the redistribution of taxes shows a desire to give more money to the wealthier, while choices are being made regarding middle and lower incomes that could increase the burden on the poorer during consumption years. As a possible solution to the question, a reduction in VAT on food to 9% was proposed, but differing views arose regarding its adoption, concerning both the actual benefit and, ultimately, the impact on the budget.
The second part of the discussion delved into technical and tax and budget strategic details: the impact of the abolition of the progressive income tax and the increase of the income tax-free minimum was discussed, as well as how tax relief reaches consumer distribution. The parties supported or doubted the effectiveness of various steps, noting that income distribution and consumption burdens must be weighed in the context of the state budget and economic environment. In addition, examples were cited from Scandinavian countries and the practical challenges faced by the governments of Sweden and Finland when reviewing tax systems, to clearly demonstrate at the time of the discussion how difficult it is to achieve a balance where consumers and workers can benefit more without the state budget suffering.
Decisions Made 1
Decisions were not made.
Most Active Speaker
Lauri Läänemets was the most active speaker, posing sharp questions about the impact of the regressivity of the Estonian tax system and the abolition of the tax wedge. His position was left-leaning, focusing on supporting low-wage earners.
Esimees Lauri Hussar
AI Summary
Riigikogu member Lauri Läänemets is posing a second question to Prime Minister Kristen Michal concerning the country's finances.
Lauri Läänemets
Profiling Sotsiaaldemokraatliku Erakonna fraktsioonAI Summary
Lauri Läänemets sharply criticizes Estonia's regressive tax system, which disproportionately favors the wealthy due to the abolition of the tax bracket anomaly (maksuküür). He demands an explanation from the prime minister as to why the government refuses to support lower-income people through the reduction of VAT on foodstuffs, citing the ability of other Nordic countries to implement this measure as an example.
Lauri Läänemets
Profiling Sotsiaaldemokraatliku Erakonna fraktsioonAI Summary
Lauri Läänemets asserts that the Estonian tax system is regressive and that the wealthy benefit disproportionately from the tax burden. He calls for the VAT on foodstuffs to be lowered to 9%, questioning why the government refuses to do so, and points to the examples set by Finland and Sweden.
Peaminister Kristen Michal
AI Summary
Prime Minister Kristen Michal explained that VAT exemptions are ineffective because their impact does not reach consumers; instead, the benefit is retained by intermediaries. Therefore, he prefers a philosophy where people are left with more of their earned money through raising the income tax-free minimum. He stressed that this change will result in an annual gain of up to 1,500 euros for middle-class working families (such as teachers and journalists), easing the burden of the failed "tax hump" that had been imposed on them.
Peaminister Kristen Michal
AI Summary
Prime Minister Kristen Michal asserts that specific tax allowances often do not reach the consumer. Therefore, he maintains it is better to raise the tax-free minimum to 700 euros so that people retain more of the money they have earned and can decide for themselves how to use it.
Esimees Lauri Hussar
AI Summary
Chairman Lauri Hussar briefly suspended the information session to welcome the delegation from the parliament of the German Federal State of Thuringia, who were observing from the balcony of the Riigikogu session hall. The delegation was headed by Speaker Thadäus König and Minister of Education Christian Tischner. Following the welcome, he gave the floor to the next questioner.
Esimees Lauri Hussar
AI Summary
Speaker Lauri Hussar greeted the delegation from the German Federal State of Thuringia and the Thuringian Parliament from the Riigikogu gallery. The delegation is led by Speaker Thadäus König and Education Minister Christian Tischner. He then announced the continuation of the information session, noting that Lauri Läänemets had a follow-up question.
Lauri Läänemets
Profiling Sotsiaaldemokraatliku Erakonna fraktsioonAI Summary
Lauri Läänemets criticizes the Prime Minister, arguing that the government’s tax policy, particularly the abolition of the income tax hump, disproportionately favors the wealthier (those earning 4000–6000 euros) over low-wage earners (1400 euros). He stresses that state budget choices should prioritize people struggling to make ends meet—for example, by lowering the VAT on foodstuffs—rather than the richest 10% of the population.
Lauri Läänemets
Profiling Sotsiaaldemokraatliku Erakonna fraktsioonAI Summary
Lauri Läänemets criticizes the state budget and tax policy, arguing that they favor the wealthy and increase the burden on lower-income individuals. He suggests that lowering the VAT on food would genuinely help those earning approximately 1,200 to 1,500 euros.
Peaminister Kristen Michal
AI Summary
Prime Minister Kristen Michal claims that the abolition of the progressive income tax will cause the greatest damage to middle and average wage earners (such as teachers and technical workers), not the rich. He emphasizes a right-wing, liberal view, arguing that taxes should not be excessive and that people should be able to keep more of their earnings.
Peaminister Kristen Michal
AI Summary
Prime Minister Kristen Michal rejected the questioner's conceptual approach to tax matters, arguing that the VAT differentiation for foodstuffs favors the wealthy in absolute terms and that the current progressive income tax (the 'tax hump') unfairly penalizes middle-income earners—specifically teachers, journalists, and doctors—who end up paying €1,300–€1,500 more in tax annually. He emphasized that this situation contradicts the left-wing principles of redistribution.
Esimees Lauri Hussar
AI Summary
Chairman Lauri Hussar expresses his thanks and announces that his colleague Riina Sikkut will be asking a supplementary question.
Riina Sikkut
Profiling Sotsiaaldemokraatliku Erakonna fraktsioonAI Summary
Riina Sikkut calls the government's tax policy a masterclass in demagoguery and irresponsible, arguing that abolishing the tax hump is an ineffective way to alleviate the tax burden on teachers and other working families, as it primarily benefits the wealthy. Meanwhile, the Social Democrats have proposed a more targeted alternative—shifting the tax bracket threshold further—while also criticizing the government for its lack of long-term vision and for letting the national debt spiral out of control.
Riina Sikkut
Profiling Sotsiaaldemokraatliku Erakonna fraktsioonAI Summary
Riina Sikkut accuses the government of demagoguery and claims that tax concessions for teachers and others must be shifted to the tax hump, not abolished, because only people earning 4,000–6,000 euros a month benefit, and the budget is irresponsible in the long-term perspective.
Peaminister Kristen Michal
AI Summary
Prime Minister Kristen Michal is fiercely defending the abolition of the tax hump, or the progressive income tax structure, emphasizing that, contrary to the criticism, the figures support the claim that the biggest winners will be precisely those earning the average wage, such as telemarketing agents and social workers, who currently pay nearly 1,500 euros more annually due to the failed system. Meanwhile, the benefit for lawmakers themselves will be significantly smaller. She asserts that eliminating the tax hump is a necessary step for boosting the prosperity of the Estonian people and revitalizing the economy.
Peaminister Kristen Michal
AI Summary
Prime Minister Kristen Michal is explaining the impact of abolishing the 'tax hump,' or progressive income tax, pointing out that the biggest benefit will go to those earning the average wage. He emphasizes that the legislative gain is smaller, and the goal is to promote the prosperity and economic growth of the Estonian people and prevent tax increases.
Esimees Lauri Hussar
AI Summary
The Chairman, Lauri Hussar, concluded the discussion of the second agenda item and, before proceeding to the third question, gave the floor to Riina Sikkut to answer a question regarding the procedure for conducting the sitting.
Esimees Lauri Hussar
AI Summary
Chairman Lauri Hussar offers his thanks and concludes the handling of the second item. Before proceeding to the third item, he asks Riina Sikkut to raise her hand and pose a question concerning the procedure of conducting the session.
Riina Sikkut
Profiling Sotsiaaldemokraatliku Erakonna fraktsioonAI Summary
Riina Sikkut disputes the tax hike calculations presented by the Prime Minister, emphasizing that despite ideological differences, the math is clear and the Prime Minister has been given erroneous figures which underestimate the actual benefit derived from the increase in the tax-free basic exemption, which, in the speaker's case, is five times greater than the 400 euros cited.
Riina Sikkut
Profiling Sotsiaaldemokraatliku Erakonna fraktsioonAI Summary
Riina Sikkut notes that despite ideological differences with the Prime Minister, we are all strong in mathematics, and she criticizes the erroneous figures presented by the PM, which factor in the income tax increase to 24%, claiming that according to her calculations, the increase in the tax-free minimum brings her five times more benefit than 400 euros.
Esimees Lauri Hussar
AI Summary
Chairman Lauri Hussar emphasizes that the preceding question was substantive in nature, not procedural, and explains that procedural questions relate solely to the conduct of the sitting, whereas correcting substantive issues or facts requires using other methods of address, such as interpellations or written questions.
Esimees Lauri Hussar
AI Summary
Chairman Lauri Hussar said that it was a substantive question, not a procedure for conducting the sitting, and that regarding the substance, one must submit a follow-up question, an interpellation, or a written question, but not objections or corrections of facts under the framework of a procedural question.