Finance Minister Jürgen Ligi expressed his opinion on tax increases on the program Reedeses intervjuus (“Friday Interview”) on Vikerraadio. :format(webp)/nginx/o/2024/07/27/16248146t1h8ec6.jpg)
Finance Minister Jürgen League. Photo: Madis Veltman
Finance Minister Jürgen Ligi expressed his opinion on tax increases on the program Reedeses intervjuus (“Friday Interview”) on Vikerraadio.
Translation: Sergey Svetlov
Finance Minister Jürgen League did not want to reveal in an interview on Vikerraadio, from which ERR excerpted, what specific tax alternatives were being considered or what his own tax plan would be.
The conversation went as follows: journalist Huko Aaspyllu asked what an alternative to increasing the VAT could be – they would increase it to 27%. To which Ligi replied: “I didn’t talk about 27 percent. “I said all sorts of things, but I will not now revise what we agreed upon.”
To this, the journalist commented that he did not want a review from the League, but simply his opinion. “Indeed, public discussion about rising prices is a sign of decline that everyone is complaining about prices. Either there is no historical memory or understanding of how the economy works – not that the government is raising prices. Even if you add two percent to the VAT, this does not mean a two percent increase in prices. First, it would be 1.67 percent. This is the first truth, and the next truth is that if a product becomes more expensive, then the demand for it falls.”
When a journalist noted that the VAT increase is a kind of trigger that leads to a wave of other increases, Ligi replied: “I rather noticed the opposite – certain goods that I buy in stores are held there… […] Well, maybe not below cost, but held in place. We must recognize the principle of supply and demand: if a product becomes more expensive, less people buy it.
Estonians are not so hungry now that it would be the end of the world. It will be much worse if we are left without quality public services, good education, and so on. In any case, the state needs funding; defense requires special efforts. And in that sense, there really wasn't much of an alternative to these tax hikes that we could easily accept. High prices are not the biggest problem, the problem is low wages.”
In addition, Ligi said he supported the abolition of land tax exemptions for housing plots and a reduction in child benefits. League also said there were no alternatives to the tax increase.
