Estonia: Central bank criticises relaxed budget rules, bank taxation

Estonia’s central bank, the Bank of Estonia, opposes the government’s plan to replace Estonia’s self-imposed budgetary discipline rules with the EU’s less stringent budget rules, ERR reports. Ülo Kaasik, vice-president of the Bank of Estonia, insisted that changing the rules simply because of an inability to meet them was never a good idea. He warned that changing the rules could, in fact, perpetuate the state budget deficit. Under current rules, the government needs to reduce any budget deficit by 0.5 percentage points per year. Also, the Bank of Estonia’s economist, Kaspar Oja, criticised the government’s agreement with commercial banks to postpone the introduction of a new bank tax. Under the agreement, banks will pay more taxable dividends instead. Oja noted that the agreement meant that banks would pay less tax.