Tõnis Saarts: Estonian voters are choosing inequality over tax reform

Political scientist Tõnis Saarts argues that with nine months to go before Estonia's next parliamentary elections, the electorate appears more willing to accept cuts to social welfare and growing inequality than to support meaningful tax reform. Parties favouring a "tax truce" command around 60% support, while economically left-leaning parties back meaningful fiscal reform with only 35%. Saarts warns that whoever wins the next election will face only bad choices, and that a deeply unequal society is a security risk for a frontline state.

With Estonia's next parliamentary elections nine months away, political scientist Tõnis Saarts has made a sobering observation: Estonian voters appear ready to accept greater social inequality rather than endorse higher taxes or a fundamental overhaul of the country's tax system. Saarts made the assessment in his midday commentary on Vikerraadio.

The numbers behind the trend

Combining the polling support for parties that either promise tax cuts or avoid any serious reform of Estonia's current regressive tax system, Isamaa, EKRE, and the Parempoolsed (the Rights), Saarts puts their combined backing at 47-48%, according to various surveys. Add in the Reform Party, which burned its fingers on large-scale tax changes and is unlikely to repeat the experiment, and the bloc favouring a "tax truce" reaches approximately 60%.

On the other side, the economically left-leaning parties, the Centre Party and the Social Democrats, who argue that Estonia's troubled state budget can only be fixed through structural tax reform, together account for around 35% support.

A choice between bad options

The underlying logic is straightforward, Saarts explains. To avoid pushing the state budget into even deeper deficit, a hard choice awaits: either cut social services significantly to avoid raising taxes, or tackle the tax system in order to preserve the current level of welfare, pensions, healthcare and education. The first path inevitably widens inequality, as costs previously borne by the state shift onto individuals.

What makes the situation particularly frustrating, in Saarts's view, is that many parties are selling voters a fantasy: that it is possible to cut taxes, maintain social services, and still close the budget gap, all through economic growth and bureaucratic streamlining. He calls this «a straightforward deception of voters».

Economists and financial experts have calculated that achieving such a miracle would require Estonia's economic output to reach UK levels within a short period, growth rates unseen in this region for decades. As for eliminating bureaucracy, Saarts notes that even dissolving every ministry and government agency entirely would not solve the deficit problem.

What comes after the election

Whoever forms a government after the next vote will face only bad and worse options, Saarts warns. Much depends on whether the ruling coalition leans economically right or left. The difference between an Isamaa-Centre-EKRE alliance and an Isamaa-Centre-Social Democrat coalition is real, but even in the latter, Saarts finds it hard to believe that a major right-wing party like Isamaa would choose tax increases over welfare cuts, given that progressive income tax remains an ideological red line for the right.

There is also a second, practical reason for right-wing caution: the current Reform Party government handled its recent tax changes so clumsily that voters developed what Saarts describes as a serious allergy to any talk of taxation. Other right-wing parties are watching that cautionary tale closely.

A security dimension

Saarts closes with a point that goes beyond economics. He reminds readers that Estonia is a frontline state, and societies that are too deeply divided by inequality are more vulnerable than those held together by solidarity and a sense of social fairness. That, he suggests, is something both politicians and voters would do well to keep in mind as the hard decisions approach.