Nine months before the next parliamentary elections, it appears that Estonian voters are more willing to accept reduced social security and growing inequality than higher taxes or a substantial overhaul of the current tax system, Tõnis Saarts says.
If we add up the support for parties that speak about lowering taxes or refuse to significantly reform today’s regressive tax system — one that favors higher earners — then support for Isamaa, EKRE and Parempoolsed reaches 47–48 percent in various surveys.
If we include the Reform Party, which is unlikely to promise major tax reforms again after being burned by them before, then support for the “tax peace” parties reaches nearly 60 percent.
Support for economically left‑leaning parties, which argue that the state budget’s weak condition can only be fixed through a thorough tax overhaul, stands at about 35 percent. Only two parties fall into this group: the Center Party and the Social Democrats.
Why does this matter, and how are taxes and inequality connected? Put simply: if the state budget is not to be pushed deeper into deficit, a hard choice must be made. Either social services are cut significantly to avoid raising taxes, or the tax system is reworked to maintain the current level of social welfare. Choosing the first option — sacrificing social welfare for “tax peace” — clearly means rising inequality, because people will have to pay more out of pocket for services previously provided by the state.
Given the current state of the budget, it is simply impossible to lower taxes, leave the regressive tax system untouched and still offer voters the same level of social welfare — pensions, education, healthcare, social benefits and more.
Yet many parties try to create the impression that everything good can be achieved at once: lower taxes, maintain social services and even fix the budget deficit. They claim this can be done through economic growth and cutting bureaucracy. This is, quite literally, misleading voters.
Economists and financial experts have calculated that achieving such a miracle solution would require Estonia’s economic wealth to rise in a short time to the level of the United Kingdom — meaning growth rates not seen in this region for decades. Considering global and Baltic Sea region trends, this is simply unrealistic. As for cutting bureaucracy, experts have pointed out that Estonia could abolish its entire state apparatus — all ministries and agencies — and still not eliminate the budget deficit.
So whoever forms the next government will face only bad and worse choices. There are no painless solutions left that would please most voters. Much depends on the coalition formed after the election — whether it leans economically right or left. In other words, there is a difference between a coalition of Isamaa, the Center Party and EKRE (or Parempoolsed) and one made up of Isamaa, the Center Party and the Social Democrats.
Yet even in a more left‑leaning coalition, it is hard to imagine a major right‑wing party like Isamaa choosing tax increases and a tax overhaul in the “taxes versus social security” dilemma. There are two reasons for this.
First, it contradicts the ideological beliefs of right‑wing parties — a progressive income tax is, for them, clearly left‑wing. The belief that the current tax system is the foundation of Estonia’s success is also deeply rooted.
Second, the current Reform Party government has handled tax changes so clumsily that voters have developed a strong aversion to taxes. Other right‑wing parties see this cautionary example and think twice.
Looking at today’s polling numbers, Estonian voters are choosing greater inequality in exchange for “tax peace.” Whether this is good or bad depends on one’s worldview. Right‑leaning voters say inequality is natural and motivates people to work harder. Left‑leaning voters disagree. But Estonia’s status as a frontline state must also be considered — societies with deep social divides become more vulnerable than those with stronger solidarity and social justice.
This may be something to think about when making the major choices ahead — for both politicians and voters.
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