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Riigikogu concluded the first reading of the 2016 State Budget and set the term for submission of motions to amend on 4 November.



The first reading of the State Budget of the Year 2016 Bill (103 SE) continued at today’s sitting. The Minister of Finance Sven Sester and the Chairman of the Finance Committee Remo Holsmer made their presentations and answered the questions posed to them, after which the representatives of the factions started the debate.

The volume of the next year’s budget is EUR 8.9 billion. It is 4.2 percent, or EUR 358 million, more than the state budget planned for 2015. The state budget is nearly balanced, i.e. 0.1 percent of the GDP. However, the structural position will remain in surplus, i.e. 0.6 percent of the GDP.

The state budget for the coming year is based on a predicted economic growth of 2.6 percent. Inflation will be restored and will increase to 2 percent. The revenues of the state budget are expected to grow by 3 percent, which includes the growth of tax revenues by 5 percent. The increase in the state budget expenditure will be 4.2 percent. The tax burden is nearly balanced, i.e. 33.4 percent of GDP. This also includes a 0.3 per cent reduction in the percentage of labour force taxes. The average salary should increase by 4.5 percent, or to EUR 1,096. Just to clarify, the general increase of the government sector’s salary fund will be 0 percent, while that of the priority sectors will be 4 percent. The average pension will grow by 5.7 percent, or to nearly EUR 395.

Kadri Simson (Centre Party faction) said during the debate that the budget suffers from a certain ambiguity in addition to the lack of vision, particularly in the area of financing for the Ministry of Education and Research. There are also no funds allocated for restoring the financing of local roads. Agriculture needs more support to overcome the crisis. She also sees other problems. Consequently, the Centre Party faction will submit its own motions to amend to the State Budget of the Year 2016 Bill. Overall, Simson sees a need for a plan with a much longer timeframe.

Andres Herkel (Free Party faction) referred to the effect that the increase in excise duties, taxes and state fees would have on the society. He thinks it was wrong to base the budget on the optimistic economic forecast. Herkel also emphasised that agriculture needs more decisive support from the government. Herkel was not happy with the funding for political parties, which has been consistently highlighted by the Free Party.

Martin Helme (Conservative People’s Party faction, EKRE) found problems in the transparency of the budget and identified a series of unfounded expenditures. Helme thinks that the budget lacks vision on how to help develop Estonian export. EKRE also believes that funds should be reallocated to support agriculture.

Aivar Sõerd (Reform Party faction) analysed the situation in economy and finance, and quoted the country conclusion made by the IMF. The assessment of the IMF is clear: our economic environment supports growth, public sector finances are in impeccable conditions, and we have large public investments and efficient public services. The IMF usually also makes suggestions, which should be taken into consideration in the further debate on the state budget.

Kalvi Kõva (Social Democratic Party faction) said that we are taking responsible steps with the budget to achieve a bigger goal in the long-term perspective. He stressed that the 2016 budget focuses on the people. Its focal points are children and families, and the coping of an increased number of people by ensuring that the most vulnerable and marginalised members of the society receive more support from the state.

Siim Kiisler (Pro Patria and Res Publica Union faction) declared that a good State Budget Act must ensure that the employees feel secure, that the employers feel secure, and that the public finances continue to be in good order at the end of the next year. A conservative and prudent budgetary policy is one of the keys to economic growth. We must take our cue from the reality in order to ensure this. The nominal growth of our economy, i.e. taking inflation into consideration, is predicted to be 5.5 %, and the increase in tax revenue is predicted at 5.3 %. This sets us a clear framework for developing a responsible budget.

Video recordings of the sittings can be viewed at https://www.youtube.com/riigikogu

(Please note that the recording will be uploaded with a delay.)

Riigikogu Press Service

Gunnar Paal, +372 631 6351, +372 51 90 2837

[email protected]