The impact of taxes on the economy
Session: 15th Estonian Parliament, 6th sitting, press briefing
Date: 2025-09-24 15:43
Participating Politicians:
Total Speeches: 20
Membership: 15
Agenda Duration: 12m
AI Summaries: 20/20 Speeches (100.0%)
Analysis: Structured Analysis
Politicians Speaking Time
Politicians
Analysis
Summary
The fourth question posed in the Riigikogu today was addressed to Erkki Keldo, the Minister of Economic Affairs and Industry, and focused on the impact of taxation on the Estonian economy. The question was raised by Riigikogu member Vladimir Arhipov, who voiced concern over the current state of the Estonian economy, pointing to decelerated growth, a deepening budget deficit, rising prices, and widespread redundancies. Arhipov sought to understand the government's view on the impact of taxes on Estonia’s competitiveness and its ability to attract investment, especially given the growing uncertainty.
Minister Keldo responded by stressing his pride in the Estonian tax system, which has been ranked the most competitive among OECD countries for 11 consecutive years. He explained that the cornerstone of the system is the zero income tax on reinvested corporate profits. Keldo highlighted the government's planned tax reductions, calling next year's income tax reform "historic"—the 700-euro tax-free minimum and the cancellation of the planned 2 percentage point income tax rate increase will leave approximately 800 million euros in the hands of the people. Furthermore, the tax increase for legal entities will also be scrapped. The Minister pointed to positive investment developments (such as the opening or expansion of three new factories last week) and the Bank of Estonia’s projected 3% economic growth, stressing the importance of stability and predictability for businesses.
In a supplementary question, Reili Rand (Social Democrats) criticized the government's "blind optimism" and its public finance policy, which significantly increases the national debt burden and violates the principle of not borrowing for current expenditures. Rand asked how this policy would affect Estonia's credit rating and the cost of borrowing. Keldo defended the borrowing, explaining that the deficit (4.5%) is directly linked to investments in national defense (5% of GDP), a trend that is widespread across Europe. He affirmed that national defense remains a priority and that the tax cuts will improve consumer confidence and boost the economy's competitiveness in the long term.
Decisions Made 1
No decisions were made
Esimees Lauri Hussar
AI Summary
Chairman Lauri Hussar gave the floor to Riigikogu member Vladimir Arhipov, who will put the fourth question regarding the impact of taxes on the economy to the Minister of Economic Affairs and Industry, Erkki Keldo.
Esimees Lauri Hussar
AI Summary
Riigikogu member Vladimir Arhipov is submitting his fourth question to the Minister of Economic Affairs and Industry, Erkki Keldo, regarding the impact of taxes on the economy.
Vladimir Arhipov
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Question to the Minister: Estonia’s economic growth this year is lower than the Bank of Estonia projected. While over 3% growth is expected for next year, it is largely based on borrowed money. At the same time, the budget deficit is growing, taxes and prices are rising, companies are making redundancies, and Estonia’s attractiveness to investors is falling—how do you view the impact of taxes on the competitiveness of the Estonian economy and the attraction of investments as the deficit deepens?
Vladimir Arhipov
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Vladimir Arhipov highlighted the alarming state of the Estonian economy, citing factors such as slower-than-anticipated growth, a future outlook reliant on debt financing, a deepening budget deficit, rising taxes and prices, and widespread layoffs. He then questioned the minister on how the increasing tax burden impacts the nation's competitiveness and its ability to attract investments, particularly as Estonia's appeal as a border country diminishes for investors.
Esimees Lauri Hussar
AI Summary
The speaker addresses the minister and makes a request.
Majandus- ja tööstusminister Erkki Keldo
AI Summary
Minister of Economic Affairs and Industry Erkki Keldo emphasizes the long-term competitiveness of the Estonian tax system among OECD countries, which is based on the tax exemption for reinvested profit, and highlights the government's decision to implement the largest tax cut in Estonia's recent history next year. This cut includes a €700 income tax-free minimum and the cancellation of planned tax increases for legal entities, leaving nearly €800 million in the hands of people and businesses. The aim is to increase consumer confidence, promote investments (citing the opening of 28 new factories), and ensure economic growth through stability and predictability.
Majandus- ja tööstusminister Erkki Keldo
AI Summary
Next year, a historic tax cut will take effect: a €700 income tax exemption will be granted to everyone, and the planned 2-percentage-point increase in the income tax rate will be scrapped. Furthermore, the tax hike for legal entities will also be cancelled, which collectively will save people approximately 780–800 million euros and foster investment and economic growth.
Esimees Lauri Hussar
AI Summary
Chairman Lauri Hussar thanks [the previous speaker] and asks Vladimir Arhipov to present a clarifying question.
Vladimir Arhipov
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Vladimir Arhipov casts doubt on the minister’s claim regarding Estonia’s most competitive tax system, highlighting that under this supposedly praiseworthy system, prices are rising and people’s ability to cope financially is declining. He also refutes the assumption of companies investing peacefully, citing the widespread uncertainty about the future.
Vladimir Arhipov
Profiling Fraktsiooni mittekuuluvad Riigikogu liikmedAI Summary
Vladimir Arhipov is asking the minister how, despite having the most competitive tax system, prices are rising and people’s livelihoods are worsening, why the claim about companies investing peacefully doesn’t hold up, and why people and businesses don’t know what tomorrow will bring.
Majandus- ja tööstusminister Erkki Keldo
AI Summary
Minister of Economic Affairs and Industry Erkki Keldo confirms that the Estonian tax system has been the most competitive among OECD countries for 11 consecutive years, highlighting the positive impact of the income tax exemption for reinvested profits and the reduction in personal income tax on the purchasing power of average wage earners. At the same time, he emphasizes that the system is progressive and that long-term economic growth and the increase in people's prosperity depend primarily on increasing exports and creating products with higher added value.
Majandus- ja tööstusminister Erkki Keldo
AI Summary
The competitiveness of the Estonian tax system relies on the tax exemption for reinvested profits and the reduction of personal income tax. This combination lowers the net tax burden across the board and fosters economic growth by promoting the development of exports, higher value-added products, and skills, thereby boosting wages and purchasing power.
Esimees Lauri Hussar
AI Summary
Chairman Lauri Hussar thanked [the previous speaker] and subsequently gave the floor to colleague Reili Rand so that the latter could ask an additional question.
Esimees Lauri Hussar
AI Summary
Chairman Lauri Hussar offers thanks and announces that his colleague Reili Rand will ask a follow-up question.
Reili Rand
Profiling Sotsiaaldemokraatliku Erakonna fraktsioonAI Summary
Reili Rand expresses astonishment at the government's blind optimism regarding the economy and competitiveness, sharply criticizing the Reform Party's decision to abandon the principle of responsible public finance and increase the debt burden to cover current expenses. She further questions how this step will affect the country's credit rating and whether it will contribute to increased competitiveness.
Reili Rand
Profiling Sotsiaaldemokraatliku Erakonna fraktsioonAI Summary
Reili Rand is criticizing the government's blind optimism and the significant hike in the debt load, questioning how these financial changes could impact the country's credit rating, the cost of borrowing for both businesses and private individuals, and consequently, our overall competitiveness.
Majandus- ja tööstusminister Erkki Keldo
AI Summary
Minister of Economic Affairs and Industry Erkki Keldo notes that although inflation is high during the crisis, incomes have grown faster, and the Bank of Estonia’s forecast of over 3% economic growth generates optimism. He also emphasizes the priority of national defense and the need to take out a loan for its rapid development, after which the focus must shift to improving the economy's competitiveness and implementing tax cuts so that people can keep more of the money they have earned.
Majandus- ja tööstusminister Erkki Keldo
AI Summary
Minister of Economic Affairs and Industry Erkki Keldo defended the government’s budget policy, justifying his economic optimism by pointing out that incomes have grown faster than inflation and by citing positive economic growth forecasts. He justified the planned deficit by prioritizing national defense, noting that borrowing is sensible for the rapid development of defense capabilities, and drew parallels with the significant defense spending of other European countries. Furthermore, the speaker highlighted the ideological opposition to the Social Democrats, defending the government’s income tax reform, which ensures people keep more of their earned money, thereby improving economic competitiveness, as tax cuts and economic competitiveness are priorities alongside national defense.
Esimees Lauri Hussar
AI Summary
Chairman Lauri Hussar concludes the consideration of today's fourth question and offers his thanks.
Esimees Lauri Hussar
AI Summary
Chairman Lauri Hussar briefly concluded the discussion of today's fourth agenda item, expressing his thanks in the process.