Every major party in Estonia has added to the state’s debt burden, according to Kaspar Oja, senior economist at the Bank of Estonia, ERR reported. While the biggest budget deficits emerged during the coronavirus pandemic, Estonia has had structural deficits every year since 2017, Oja noted. His analysis found that when in government, the Conservative People’s Party of Estonia (EKRE) had contributed 2.7% of GDP to the deficit, followed by the Estonian Centre Party (Keskerakond) with 2.3%, Estonia 200 with 0.92%, Fatherland (Isamaa) with 0.65%, the Social Democratic Party (SDE) with 0.47%, and the Estonian Reform Party with 0.41%.
Ülo Kaasik, governor of the Bank of Estonia, called for an interparty agreement on reducing the budget deficit and curbing the growth of public debt, ERR reported. A similar proposal was made earlier by the central bank’s former governor, Madis Müller, BNS reported. Speaking at a meeting with party leaders, Kaasik suggested setting a debt ceiling at 30% of GDP. However, party leaders said that reaching a political agreement on the issue between parties was not realistic. Nevertheless, Reform supported the proposal to reduce the budget deficit by 0.5 percentage points per year and cap public debt at 30% of GDP, ERR reported.
Opposition parties have pledged major tax changes after the parliamentary elections, ERR reported. Most opposition parties plan to abolish the car tax. Both the Centre Party and SDE support introducing a progressive income tax system and lowering the VAT on food. In addition, the Centre Party called for a windfall tax on bank profits and a digital tax on large technology companies. Meanwhile, the Right-Wingers (Parempoolsed) would lower the overall VAT rate to 20% and the income tax rate to 18%, while also making broad spending cuts, ERR reported. EKRE also called for deep spending cuts together with sweeping tax reductions.