Following the recent call for Estonia’s higher defense spending by the commander of its defense forces, Mart Võrklaev, the Estonian finance minister, has been quoted as saying by the Estonian Public Broadcasting service, ERR News, that rising costs of defense leave the Baltic nation with “no other option but to move towards a broad-based security tax — but not until 2026.”
On Monday, General Martin Herem, an Estonian general and the current Commander of the Estonian Defence Forces, told ERR News that Estonia’s defense spending could soon be upped to 5% of the country’s GDP for several years to purchase arms and ammunition worth €1.5 billion, in order to deter the Kremlin from attacking, and also allow for the country to destroy Russian infrastructure should neighbor Russia decide to attack.
According to ERR News, Kusti Salm, the Permanent Secretary of the Estonian Ministry of Defense, has said that “€1.5 billion is the minimum amount needed.”
Võrklaev has told the website that Estonia needs to change its tax system to earmark 5% of its GDP for the defense budget as the current system leaves no room for such expenses.
“Looking at the state of our state budget and the expenses we spend on national defense, broad-based security — internal security, Estonian-language education, the social sector — we need additional tax revenues. For this, it is reasonable and necessary to make a broad-based security tax. Of course, this tax base cannot be taken from anything other than existing or similar tax collection instruments. We do not plan to do this by 2025 because the economy is still recovering. But looking at our committed spending from 2026 onwards, I don’t think we can do it any other way,” the finance minister said, according to the news service.
“If we are talking about bringing in an extra €200 million or so in the budget, and we can see that society has accepted this with relative reluctance, then if we were now to say that we need to bring in €400 million on the basis of current calculations, and if we increase defense spending by a further 1.5%, we are talking about another €600 million. A billion in taxes would mean a five-fold car tax. This is what it would mean for society.”
According to ERR News, Kusti Salm, the Permanent Secretary of the Estonian Ministry of Defense, has said that “€1.5 billion is the minimum amount needed.”
Võrklaev has told the website that Estonia needs to change its tax system to earmark 5% of its GDP for the defense budget as the current system leaves no room for such expenses.
“Looking at the state of our state budget and the expenses we spend on national defense, broad-based security — internal security, Estonian-language education, the social sector — we need additional tax revenues. For this, it is reasonable and necessary to make a broad-based security tax. Of course, this tax base cannot be taken from anything other than existing or similar tax collection instruments. We do not plan to do this by 2025 because the economy is still recovering. But looking at our committed spending from 2026 onwards, I don’t think we can do it any other way,” the finance minister said, according to the news service.
“If we are talking about bringing in an extra €200 million or so in the budget, and we can see that society has accepted this with relative reluctance, then if we were now to say that we need to bring in €400 million on the basis of current calculations, and if we increase defense spending by a further 1.5%, we are talking about another €600 million. A billion in taxes would mean a five-fold car tax. This is what it would mean for society.”
Source: news.err.ee
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