How to restart the economy and schools? What will the new tax plan lead to? Who will replace teachers who will not be able to continue working from September 1?
- The economy is in an absolutely hopeless situation.
- The alternative is to cut pensions and salaries
- A surge in cross-border trade will not be tolerated
How to restart the economy and schools? What will the new tax plan lead to? Who will replace teachers who will not be able to continue working from September 1?
Rus.Postimees' questions were answered live by a participant in the coalition negotiations, Minister of Education Kristina Kallas (vice-chairman of Eesti 200).
Excerpts from the conversation :
– How to restart the economy by increasing taxes?
– Of course, increasing taxes will not really help economic growth. Everyone knows this theory. In practice, the situation is such that in good times for the economy, state budget reserves were eaten up. In the current situation, when urgent expenses arose, we were left without additional resources. Unfortunately, during the economic crisis we have to increase taxes. This is an absolutely hopeless situation.
– Have the consequences been calculated?
– Of course, the economy will be damaged. We understand this. However, the consequences of not getting the budget in order could be even more serious. I had to choose the lesser of two evils. There are simply no good options at the moment.
– Will it be possible to restore the purchasing power of the population? This is important because consumption taxes account for half of a country's GDP…
– The average salary is still growing. We have a very strange economic crisis. Unemployment has not risen sharply. Of course, consumption will be below the predicted level, but everything is taken into account.
The budget deficit must be reduced to 3% from the current 5.6%. If we continue on the same path, loans on the world market for our enterprises will become more expensive. Estonia needs financial stability. And we are starting to move in this direction.
The European Commission has already said that if we do not keep the deficit within 3% next year, it will have to decide for itself how to reduce Estonia's state budget deficit. The government is responsible for not waiting for someone from Brussels to demand cuts to teachers' pensions or salaries. We must do this ourselves. We need to decide where and what to cut and what taxes to raise.
– The growth of pensions is beyond the capacity of the state, admitted the chairman of Eesti 200, Margus Tsahkna. What are the prospects? Freezing indexation, pension cuts and extending the retirement age?
– The reform to increase the retirement age has already been carried out. Every year the age limit is raised by three months. I think freezing pensions is unfair. Estonia has the lowest pensions in the EU compared to the average salary. For this reason, pensions should continue to grow for as long as possible. All our pensioners are at risk of poverty. The coalition agreement states that we will not touch the indexation of pensions.
– However, the indexation of pensions will be eaten up by income tax on pensions exceeding the average level…
– But it’s temporary! The income tax is set until the end of 2028 because we really need to increase spending on defense, border protection and infrastructure.
The forecast for the next 10-15 years shows that the current tax base pensions can no longer be sustained. The pension fund deficit is growing endlessly. And faster than the average salary and tax revenues.
I consider the collapse of the second stage of pension insurance carried out by Fatherland to be a criminal act. As a result, in 10-15 years our pensioners will become extremely poor. This money has been stolen. Yes, they entered the country's economy and caused a surge in 2021-22, but that was just one moment. Then the decline began again.
The prospects for our pensioners are very sad. Now the government will have to create a long-term plan for pensions again. And from scratch. We will try to attract private contributions to pension funds. This includes employers' pension funds. Otherwise, future pensioners will live very poorly.
Difficult times are coming for everyone – for entrepreneurs, for retirees, and for those who receive an average or lower salary. However, these difficult times must be overcome in order to survive the current crisis geopolitical situation.
– Will the increase in excise taxes lead to a new surge in cross-border trade?
– We agreed that as soon as the impact of excise taxes on cross-border trade with Latvia becomes noticeable, the government will be ready to respond immediately. Let's start reducing the increase in excise taxes.
– What is the situation with schools? How many teachers have been fired for being unsuitable for their position? How much has been cut?
– Local governments know this. The Ministry only has information that relates to public schools.
The biggest problem is with teachers who will be able to teach in Russian longer – they still have about three years left. Some of them do not have the B2 category required by law. However, among them there are many who received category B1, studied and are studying further, but have not yet had time or were unable to pass the exam. I believe that such teachers need to be further supported so that they can learn the language.
– They won't be fired?
– We in the government have agreed in principle that teachers with category B1 who continue to teach Estonian will be able to remain at work for another year: on a temporary contract. After successfully passing the B2 exam, they will be able to sign a permanent employment contract again.
More details in replay!
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Postimees Studio: how to restart the economy and schools? Photo: Eero Vabamägi
- How to restart the economy with tax increases?
- How will the purchasing power of the population be restored and prices stop rising?
- Will an increase in excise taxes lead to a new surge in cross-border trade?
- What will schools come with by September 1? How many teachers will leave their jobs? How many new frames have been found?
- Are schools guaranteed to be fully staffed?