Coalition partners confirm composition of new govt

Photo: Tairo Lutter

The three parties of the new coalition, Reform Party, Estonia 200 and the Social Democratic Party (SDE), reached an agreement on the composition of the new government on Saturday.

Of the 13 ministers of the government, seven are from the Reform Party, three from SDE and the remaining three from Estonia 200.

Kaja Kallas will remain prime minister, the position of finance minister will be given to Mart Vorklaev, the position of defense minister to Hanno Pevkur, the position of culture minister to Heidy Purga, the position of minister of climate and the living environment to Kristen Michal, the position of minister of social protection to Signe Riisalo and the position of justice minister to Kalle Laanet.

SDE chairman Lauri Läänemets will become interior minister, Riina Sikkut will hold the position of minister of health and labor and Madis Kallas will become minister of regional development.

Estonia 200's ministers include Margus Tsahkna as foreign minister, Kristina Kallas as minister of education and research and Tiit Riisalo as minister of economic and digital affairs.

The position of Riigikogu speaker will go to Estonia 200 chairman Lauri Hussar.

Coalition partners approve coalition agreement

The extended boards of the Reform Party and Social Democratic Party (SDE) and the general assembly of Estonia 200 approved the text of the coalition agreement on Saturday.

«This agreement will ensure that Estonia is protected, that we can continue as an independent and a self-sufficient country,» Reform Party leader Kaja Kallas, who is planning to continue as prime minister in the new government, said.

«To ensure this, we must make decisions that may be difficult, but are unavoidably necessary for Estonia. We want Estonia to be protected, the well-being and livelihood of our people to be guaranteed, the state's finances to be in order, education, language and culture to be preserved, and tomorrow to be better for everyone,» she added.

According to Lauri Hussar, leader of Estonia 200, an innovative, Estonian-minded and liberal coalition will be born, the biggest common denominator of which is values.

«Marriage equality will come and end the conflict dividing society and also ensure that all people are treated equally. This will be a coalition that will fix up Estonia, increase our security and open completely new horizons for Estonia,» Hussar said.

SDE chairman Lauri Läänemets said that the coalition agreement is a compromise reached as a result of difficult discussions.

«We all understand that the country is facing difficult and painful decisions, which is why the participation of the Social Democrats in this coalition is particularly important -- we decided that the minimum wage and the revenue base of local governments will rise, these things are extremely important in an economically difficult situation to ensure the coping of the people of Estonia,» Läänemets said.

New coalition agreement containing tax hikes, introducing car tax

While there was essentially no mention of possible tax increases before the elections, the coalition agreement of the Reform Party, the Social Democratic Party (SDE) and Estonia 200 published on Saturday includes rising taxes as well as something completely new, such as the car tax.

The new coalition aims to move towards a state budget balance, reviewing both the revenue and expenditure side of the state budget and finding opportunities for savings.

«We will carry out a review of the state budget with zero budget principles and increase the transparency of the budget. We will expand the tax base of the state and local governments and focus more on consumption, pollution and property taxation than before. From 2025, we will eliminate the current tax hump on personal income tax and increase the basic exemption to 700 euros per month,» it is said in the coalition agreement.

The coalition announced that it will increase VAT by 2 percent in 2024 and the lower VAT distinction for accommodation service providers will also be abolished from Jan. 1, 2025. Personal and corporate income tax will be increased by 2 percent in 2025 and car tax will be introduced as a new tax from July 1.

«Wit the tax policy, we will favor the circular economy and the reuse of resources. We will tax the use of packaging and plastic with the aim of reducing the generation of packaging waste. We will continue the taxation of vices and health risk behaviors while preventing the emergence of cross-border trade. We will give local governments the opportunity to impose local taxes. We will review environmental and resource charges and tax deforestation. We will increase the state's tax revenue from gambling. We will abolish additional tax-free income from children, spouses and mortgage interest from 2024,» the coalition partners list in the agreement.

At the same time, the government coalition promises to establish a minimum wage of 60 percent of the median wage in the public sector by 2027.

«We aim to conclude a trilateral goodwill agreement with trade unions and employers in May 2023, so that minimum wage reaches 60 percent of the median wage by 2027 and the minimum wage grows faster than the average wage,» the government coalition promises.

Coalition to continue with transition to Estonian-language education

In the coalition agreement published on Saturday, the Reform Party, Social Democratic Party (SDE) and Estonia 200 promise to continue with the transition to Estonian-language education and the organization of the school network, expanding opportunities to maintain primary schools close to home.

In the organization of higher education, the new coalition considers sustainable financing of higher education and the increase in the quality of higher education to be important. The coalition is guided by the principle that foreign students are important to Estonia because they increase the competitiveness of Estonian universities, while teaching foreign students the Estonian language so that they can contribute to the Estonian economy is also considered important.

The plan is to establish Estonian-language pre-school, general and vocational education in accordance with the current law.

«By 2027, we will switch all pre-school education in Estonia to the Estonian language, where children attend a common kindergarten, regardless of the language they speak at home. From the fall of 2024, every kindergartener is guaranteed Estonian-language or language immersion education according to their skills and abilities. By 2030, we will transfer all basic education in Estonia to the Estonian language, where children attend a common school, regardless of the language they speak at home. From the fall of 2024, every starting first grade student with a mother tongue other than Estonia is guaranteed Estonian-language or language immersion education according to their skills and abilities. When establishing a uniform Estonian school, we are guided by regional specificities and recommendations made by researchers, and if necessary, we will create an individual transition plan for the so-called Russian school,» it is said in the coalition agreement.

When it comes to teachers' salaries, the new coalition aims to increase teachers' salaries to 120 percent of the average salary in four years, including increasing the share of the differentiation fund.

«We will create career models for educators with an appropriate workload calculation and salary model. We will raise the mandatory school age to 18 years of age, until the acquisition of post-basic school education or a profession. The change will apply to students graduating from basic education in 2024,» the coalition agreement states.

The government also considers it important to cooperate in the field of education with the private sector in order to jointly solve the challenges of the field. For example, in cooperation with the private sector, solutions can be found in the development of flexible learning methods, modern teaching material can be created and young people's interest in real and natural sciences can be increased.

According to the new coalition, the school network needs clearer organization and rules.

«We will develop a funding model for the school network that encourages the running of kindergarten-primary schools close to home up to the second stage of study. All rural schools with grades from first to sixth will receive grade-based funding, provided that there are 30 or more children studying there on average over three years. The grade-based funding will decrease gradually between 30 and 20 children,» the coalition agreement states.

The coalition promises to invest public funds in research and development activities to the extent of 1 percent of GDP and support entrepreneurs so that the private sector invests at least 2 percent of GDP in research and development activities.

«We will increase the operational support for higher education by 15 percent in the next three years and increase the possibilities of involving private funding in order to increase the funding of higher education to 1.5 percent of GDP. We will support the continuation of the free first Estonian-language higher education degree in the current volume. We will give universities the opportunity to establish tuition fees for studies in the Estonian language in certain cases,» it is said in the coalition agreement.

New govt promising to step up cooperation with Baltic, Nordic countries

The coalition agreement signed by the Reform Party, the Social Democratic Party (SDE) and Estonia 200 provides for the continuation of support for Ukraine, for the sake of which it is planned to intensify cooperation both within the Baltics and with the Nordic countries.

The three coalition partners affirm that the goal of Estonia's foreign policy is comprehensive protection of Estonia's strategic interests and ensuring the country's security in international communication. The plan is to support Ukraine in restoring its territorial integrity and repelling Russian aggression. At the same time, Estonia will maintain and strengthen its own allied relations with all NATO countries and European Union partners and further increase regional cooperation with the Baltic and Nordic countries.

«We will strengthen business diplomacy, support Estonian companies in new markets, develop relations with third countries. We will fully support Estonian citizens staying abroad and returning to their homeland,» the coalition agreement reads.

It is also planned to support the continuation of the enlargement policy based on clear criteria of the European Union and NATO as well as to help empower the eastern partners of the European Union in domestic reforms and strengthening democracy and the rule of law. All-round cooperation with the United States as a strategic partner will be continued both in national defense, economy and culture.

«Estonia is an active member of the European Union, which protects its national interests in the creation of legislation and the shaping and implementation of policies while prioritizing unity,» the three political parties write in their agreement.

«We will strengthen Estonia's diplomatic capacity, which, through a dynamic, open and motivated foreign service, will ensure Estonia's security, foreign economic interests and protection of citizens in the world in the best possible way. To this end, we will update the Foreign Service Act and strengthen strategically important embassies,» the coalition partners add.

Special emphasis will be placed on active economic diplomacy, which will enable Estonian companies to expand to foreign markets, bring in new investments and create prosperity for Estonia as a whole. The focus of development cooperation will be on the promotion of a secure and economically successful neighborhood that is also democratic and based on the rule of law in the eastern neighborhood of the European Union.

«We will unite the global Estonian community by supporting the establishment of a global network, so that those who wish can get information about Estonia and contribute to the development of Estonia,» the coalition agreement states.

Here, too, the plan is to comprehensively strengthen cooperation between the Nordic countries and the Baltic states.

As part of supporting Ukraine, the coalition partners promise to stand for the tightening of the sanctions imposed on Russia in the European Union and to support Ukraine economically, politically, militarily and on its path to NATO.

«We will actively contribute to the reconstruction of Ukraine and will work to ensure that the Estonian public and private sectors' experience, skills and potential of companies find the widest possible use in Ukraine,» the coalition agreement states.

«Estonia will continue international cooperation in order to bring the key figures of Russia and Putin's regime to justice for crimes of aggression. It must also be ensured that the confiscated Russian assets can be used to rebuild Ukraine,» the coalition partners add.

According to the agreement, Estonia also supports the enlargement of the European Union and the start of accession talks with Ukraine and Moldova as soon as possible.