Cracks open in ruling coalition

TALLINN - Major cracks have appeared in the Estonian ruling coalitionas the main parties engage in a spat over tax reform.

The Reform Party attacked its coalition partners following adecision by the Pro Patria and Res Publica Union to shoot down a series of taxamendments.

Reform Party General Secretary Kristen Michal told theBaltic News Service that the situation was "ugly," but stopped short of sayingthat the spat could plunge the government into a crisis. 

"I don't know if this is an attempt to topple thegovernment, but it's very unpleasant… I cannot say if this is a governmentcrisis," Michal said.

As the economic situation in the Baltics becomes steadilyworse following years of rapid growth, the Estonian government is faced withnegative economic growth rates and the necessity to increase income, cut costsor accept a major budget deficit.  

Michal said the Pro Patria and Res Publica Union wanted toapproach the problem by raising the uniform value added tax rate by twopercentage points to 20 percent. The Social Democrats, however, say that themove would still result in a negative budget.

The Social Democrats claim the only way to balance thebudget is by raising the income tax. The party also criticized the union forincreasing expenditures in the Defense and Education Ministries while shootingdown a proposal to raise the excise duty on natural gas. 

Though the argument over patching up the budget has becomeheated, it is doubtful that the spat will escalate enough to result in a fullbreak in the ruling coalition.

Ain Seppik, vice chair of the oppositionCenter Party parliament group, toldthe Baltic News Service that the coalition will still be able to find a commonlanguage. 

"The coalition's not in good health, it's coughing andhacking, but this is still not the disease that will break it," the lawmakersaid.

"Especially evident is rivalry between the Pro Patria andRes Publica Union and the Reform Party, which spells nothing good," he said.