The chairman of the opposition Isamaa party, Urmas Reinsalu, said in his speech before the party’s extended board on 26 August that meetings with the Estonian business leaders have revealed the current government is not doing much to support economic growth.
“The backbone of the Estonian economy is our industrial production. As at the end of June, our manufacturing sector’s export sales had fallen by 16 per cent year on year. And exports account for more than two-thirds of total production. I’ve had meetings with many business and industry associations. There’s a strong feeling among entrepreneurs: this government is not active in supporting economic growth,” Reinsalu said.
The Isamaa leader said one of Estonia’s best-known businesspeople has told him that what happened in Estonia this spring, upon the announcement of the programme of the new coalition government, was very much like “a second June coup”, likening it to the Communist takeover of June 1940.
“And by this, he didn’t mean just narrowly the realm of taxes. Today’s leaders of Estonia are plain afraid of business organisations, as demonstrated by the embarrassing unwillingness of the minister of finance to communicate with the Chamber of Commerce and Industry. Secondly, the cascade of new taxes and increases to existing ones creates instability amid the current economic downturn,” Reinsalu said.
“Somewhat offhandedly, the perception is imposed on society that a higher tax burden is inevitable. The kind of attitude that is now being imposed on us has not been seen in Estonia for a generation. This is an ideological course,” Reinsalu noted.
The mass of regulations undermine competitiveness
“The only analytical assessment of the cascade of tax hikes is from the Bank of Estonia, which says tax hikes boost inflation and slow economic growth.”
According to the Isamaa leader, businesses see that the ever-increasing mass of regulations is undermining their competitiveness. In addition, the situation of the markets is gloomy and many have not been able to find buyers for their usual volume of output for the near term.
This, he said, is exacerbated by two more elements of instability. Firstly, the uncertainty of the agenda of the government’s planned green transition and, secondly, lack of clues as regards future energy prices, Reinsalu said, demanding that the government act more quickly in mobilising European Union funds.
“We will put forward proposals to reduce over-regulation of business and oppose government policies in all sectors that worsen the business climate,” he said. “The success of an economy depends on initiative and freedom. The state must support the economy, not hinder it.”
Isamaa is also in favour of cutting government expenses. According to the party, a 20 per cent cut to the bureaucracy of the central government is absolutely within the state’s powers. Reducing the volume of administrative activities will be contained in the proposals as a separate goal.