Wages center of budget debate

TALLINN - Estonia’s government discussed the 2014 state budget at a cabinet meeting on Aug. 29; ministers estimated that one of the most disputed issues in it will be raising the income tax-free minimum, reports Public Broadcasting. Finance Minister Jurgen Ligi (Reform Party) said that the state budget calculations made in the spring are still valid and expenses will be bigger next year than they are this year.

A wage increase is important in next year’s state budget, both Ligi and Prime Minister Andrus Ansip confirmed. “A wage increase is an aim, yes, but I wouldn’t announce the percentages [yet]. The press has certainly voiced bigger percentages than are affordable or sensible,” said Ligi.

“A wage increase is certainly one of the priorities. The budget possibilities are nothing to be cheerful about, but the lower than expected economic growth doesn’t affect the budgetary process considerably,” said Ansip.
A proposal has been made to the government to increase the income tax-free minimum, but the size of it hasn’t yet been decided. “Raising the income tax-free minimum will facilitate domestic consumption. It is hard to say where the proper balance point is, as my colleague hasn’t shown the official forecast to us,” said Economy Minister Juhan Parts (Pro Patria and Res Publica Union).

The press has given a number of about 500 euros per month as the income tax-free minimum, i.e. the income on which one doesn’t have to pay income tax, but neither Ligi nor Parts considers this to be realistic. “A five hundred euro income tax-free minimum means that income tax will remain a tax on the minority, and the majority of local municipalities will be under the state’s upkeep and they won’t have their own income,” said Ligi. “Five hundred euros is an aim. It is Finland’s level, we have to understand that it is Finland’s level; there is no fast road to achieving that,” said Parts.

On Aug 29, the Finance Ministry showed to the other ministers what the possibilities of the state are and how realistic their wishes are. The government will hand over the budget to the Riigikogu by the beginning of October at the latest.