Estonia: Government to raise EUR 2.5bn for defence by end of 2028

The Estonian government expects to raise around EUR 2.47bn of new tax revenue to finance increased defence spending by the end of 2028, the Ministry of Finance estimated, ERR reports. The new so-called broad security tax will consist of three components: increased VAT rate, rise in personal income tax, and a corporate profit tax. The ministry estimated that the three tax hikes would generate EUR 113mn of additional budget revenue in 2025, EUR 751mn in 2026, EUR 784mn in 2027, and EUR 822mn in 2028. At the same time, the government plans to cut budget spending by EUR 1bn over four years, Prime Minister Kristen Michal said, ERR reports. He noted that Estonia had an aggressive neighbour and therefore needed to procure more weapons. Meanwhile, the Ministry of Finance estimated that over EUR 2bn of state budget funds could remain unused by the end of 2024, ERR reported.