Widespread criticism of rising taxes is understandable, but no one has offered up any good alternatives yet, said Prime Minister Kaja Kallas (Reform) on Tuesday.
Kallas said the government knew there would be fierce criticism of the move.
“This outrage is completely understandable. When I realized that we had to make such difficult decisions, I didn’t sleep for several nights in a row. And knowing what was coming, I also told my team to put on their helmets and their bulletproof vests, because now the criticism is going to come from all sides and it is not going to be gentle. And so it has been,” the Prime Minister told “Ringvaade”.
“At the same time, while I understand the outrage, I wonder, are there alternatives? I’m always asking if you have any good ideas,” Kallas said.
Asked if anyone else had put forward good alternative solutions she said: “It hasn’t happened yet.”
“The same opposition that criticizes, keeps introducing new bills to increase subsidies and writes in the line [stating] where the money comes from that the Ministry of Finance will do the analyses. By today, it should be clear to everyone that any increase in subsidies still comes out of the taxpayer’s pocket and you have to say what one thing or another will cost the taxpayer in the end,” added Kallas.
The new government will raise income tax and VAT by 2 percent, from 20 percent to 22 percent.
A number of other taxes are also expected to rise and it is hoped a new car tax will generate €120 million a year for the budget. Fuel taxes are likely to rise too.
The coalition says cuts are needed to close the €1.7 billion budget deficit, which currently amounts to 4.3 percent of GDP.
Ukraine cannot become a member of NATO during wartime
Kallas made her first foreign visit to Ukraine this week and met with President Volodymyr Zelenskyy.
She said Zelenskyy’s biggest concerns are primarily related to ammunition and weapons, NATO, and the European Union.
Kallas said it is clear that Ukraine cannot join the alliance while the war continues as the allies do not want to be pulled into the conflict themselves.
“When it comes to giving some kind of security guarantees to Ukraine, the only security guarantee that really works is NATO membership. And we, for our part, are trying to persuade the allies why such a clear perspective should be given to Ukraine after the end of the war so that these messages are clear. And on the other hand, again, we are telling Ukraine what they should also do in their rhetoric or persuasion to move in that direction,” explained Kallas.
The Ukrainian authorities do not feel direct pressure from the West to start peace negotiations, she said.
“But it is clear that their success on the battlefield will depend on how much the allies support them with weapons,” the prime minister added.
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