RIHO TERRAS ⟩ The funds from the security tax will go towards who knows what. A better solution is needed

Riho Terras Photo: Genevieve Engel / Euroopa Parlament

The government led by Kristen Michal has announced new tax hikes, presenting them to the public as a security tax. Since it is unlikely that the collected funds will be used solely for national security, such a concept undermines the public's will to defend their country, MEP Riho Terras (Isamaa) writes.

Prime Minister Michal deserves some praise for understanding the importance of investing in NATO plans, and he also appears to recognize the urgent need to procure additional ammunition. However, investing in defense through broad-based tax hikes is the worst of the possible options.

The main problem with the proposed tax increases is that they primarily affect financially disadvantaged people. Under the previous prime minister, the government had already reduced benefits for raising children, and now further cuts are planned from the same area.

Michal's government's policy also hits ordinary young families the hardest, where children are small, and parents are just starting their careers. These are the young men and women whose will to defend their country is most crucial for Estonia's national security.

The bureaucratic machinery is expanding

To make the tax hike more palatable to the public, the increases in VAT, income tax, and the tax on corporate profits have been labeled as a security tax. It is clear to everyone that the collected funds go into one large state budget pot, making it unlikely that they will be used solely for purchasing ammunition or other critical procurements.

If the population perceives that the money collected under the name of the security tax is simply going towards maintaining the bureaucratic machinery, disappointment will arise not only with the government but also in the necessity of contributing to security.

At the same time, society perceives the expansion of the state's bureaucratic machinery as a measure to cover its own needs. Cutting back the state apparatus is only talked about in very general terms, if at all. There is no concrete plan to even stop the ever growing number of public servants, let alone reduce it.

If the population perceives that the money collected under the name of the security tax is simply going towards maintaining the bureaucratic machinery, disappointment will arise not only with the government but also in the necessity of contributing to security. Estonia has spent thirty years building the population's will to defend their country. Willingness to defend is like trust, hard to build but easy to break. Using security to justify tax increases to fill the state's empty coffers is the worst thing one can do from the perspective of maintaining the will to defend.

The government must understand that it needs people willing to defend the country, but also people for whom it is done. The state and the people are protected for the sake of children and their future. The more children grow up in patriotically minded families, the more defenders the state will have in the future. As a result of the current government's policy, fewer children are born, and there is a trend towards reduced will to defend among families.

If the government wants to raise taxes, they have the right to do so in a democratic country. But tax hikes that primarily affect the most vulnerable groups in society should not be done in the name of security. If you wish, call it a tax for fixing the state's finances, but not a security tax.

A much better alternative

A much better way to increase society's will to defend would be to involve people in a campaign to purchase national defense bonds. Essentially, this means that the state takes a targeted loan from its citizens to purchase ammunition.

Together with Raul Eamets, we have already written that issuing national defense bonds would be a much faster and more efficient way to procure ammunition. The money would stay in Estonia, and it would also be possible for people to put their otherwise idle funds to better use.

Later, the state would need to repay the loan to the people with interest, which would cost as much as forgoing the construction of one wooden Nature Hub. Considering the alternatives, this would be a negligible sacrifice.

Instead of tax increases in the name of security, issuing national defense bonds would provide society with a sense of involvement and unity, sufficient ammunition reserves, increased patriotism, more security for families, and a significantly greater will to defend.