Läänemets: Mihal has fallen into a budget trap of his own making

Social Democratic Party chairman Lauri Läänemets stated that Reform Party leader Kristen Mihal has trapped himself by setting a goal to cut the state budget without increasing state revenues. According to Läänemets, this approach endangers Estonia's internal security.

Läänemets wrote on social media that the desire to cut the budget arose after the Bank of Estonia, IMF, OECD, and other organizations highlighted the poor state of Estonia's public finances. On the day he summoned party leaders to agree on a common goal, the Reform Party board (about which Finance Minister Ligi knew nothing) announced an annual reduction of the state budget deficit by 0.5% of GDP (approximately 225 million euros). However, the panic need for savings came after the ruling coalition's last budget decision, which cut revenues by about 800 million euros (cancelling the "tax hump" and the security tax).

As a result, high-income workers' earnings increased, while current state expenditures had to be covered by loans. "Now Mihal has fallen into a trap he created himself. Cutting state budget revenues and putting state finances in order are not the same thing," Läänemets said.

He emphasized that tax revenues from the state budget do not disappear into thin air – society gets something in return. The budget is an investment in infrastructure, human capital, and security. Cuts mean the state invests less in children, security, and economic development. Läänemets accused the Reform Party of sacrificing national security for its ratings.

He noted that the Police and Border Guard Board is the most affected state institution in Estonia's history – over the past few decades, the Ministry of Interior's area has been cut by 20% (over 2,000 employees). A couple of years ago, a criminal investigator was guarding the Russian embassy because there were too few patrol police. The Rescue Board lost almost all civil protection staff, and capacity was restored by cutting preventive work.

Estonia is one of the safest countries in Europe, which is a more important competitive advantage than a flat corporate income tax. Läänemets warned that half of Western intelligence agencies are warning about increased Russian hybrid activity in the Baltic states, yet the Reform Party wants to reduce Estonia's ability to counter threats.

He concluded that the budget debate lacks a perspective on state investments in society. Security, human capital development, climate, family protection, birth rate, and aging are treated merely as expenses to be saved on, making the country poorer and weaker.