Praxis Study on Tax Changes Sparks Dispute Between Ligi and Equality Commissioner
Estonian Finance Minister Jurgen Ligi has criticized a Praxis study on the impact of tax changes, claiming its data is outdated, while Equality Commissioner Kristian Veske emphasizes that low-income households are hit hardest.
A study by the Praxis think tank on the impact of the government's tax changes has caused disagreement between Estonia's Ministry of Finance and the Equality Commissioner.
The study's authors concluded that the tax changes have hit low-income households the hardest, but the Ministry of Finance considers these findings outdated and not reflective of the current economic situation, reported news portal ERR.ee on Tuesday, July 7, citing the show "Aktuaalne kaamera" on ETV.
According to the study, the tax package had the most significant impact on low-wage workers, single parents, and elderly women living alone. Equality Commissioner Kristian Veske believes that even a loss of 18–24 euros per month is significant for low-income families, as the rise in indirect taxes and the cost of living reduces their already limited financial buffer.
"For many people, this is a considerable sum. If monthly income decreases by 18 or 24 euros, they have to forego part of their necessary expenses," Veske noted.
He also believes that the impact of tax changes should be assessed together with inflation and price increases. In his view, the universal support measures used by the state during the crisis are less effective in the long term than targeted assistance to those who truly need it.
Finance Minister Jurgen Ligi (Reform Party) sharply criticized the study's conclusions, stating that they are based on last year's data and do not account for changes in the economy. According to him, residents' well-being is now improving thanks to rising wages and increased state benefits.
"Saying that the poor are worse off than the rich – I agree with that. But you cannot simultaneously claim that you cannot collect taxes, reduce spending, and demand a balanced budget," Ligi said.
The minister also stressed that in absolute terms, the main tax burden falls on wealthier residents. As an example, he cited the car tax, which he says affects people with higher incomes more.
According to Ligi, the economic situation last year was indeed difficult, but the rapid growth of the minimum wage and incomes of low-wage workers refutes claims that the poor are getting poorer. Additionally, an increase in the allowance for single parents will take effect in autumn.
