Two things change the most in Estonia after the change of prime minister from Kaja Kallas to Kristen Michal. The new government will be sworn in on Monday.
TALLINN The current Prime Minister of Estonia Kaja Kallas is leaving as the EU’s high representative for foreign policy. His successor is 49 years old Kristen Michal.
We talked about the background of the change of prime minister in this article:
Kaja Kallas made the “sannamarines” and goes abroad for a top job – in her home country of Estonia, many people curse her name
The government negotiations of the centre-right Reform Party, the Social Democrats and the liberal Estonia 200 led by Michal have been completed. Here are the two things that will change the most with the new government.
1. Taxes are going up
The new prime minister has spoken about the national defense tax, which is supposed to cover the increasing defense expenses due to Russia’s war of aggression.
Money is needed for, among other things, new weapon systems, such as HIMARS missile systems with launch platforms, anti-aircraft and anti-surface anti-ship missiles.
Former Commander of the Defense Forces Martin Heremin according to the country should, however will invest at least another 1.6 billion euros for ammunition. It is above all about missiles and modern artillery ammunition.
According to Kristen Michal, Estonia will invest an additional three billion euros in defense over the next three years, in addition to the annual defense expenditures of 1.3 billion euros.
However, the national defense tax will not be a completely new tax. This is a general term for wider tax increases.
The government of Kaja Kallas already had time to increase the value added tax by two percentage points to 22 percent. It will rise by two more percentage points next year. In addition, the income tax will rise by two percentage points in 2026, i.e. to 22 percent. Alcohol, tobacco and fuel taxes will also increase.
From 2026, companies will have to pay a tax of two percent of the annual operating profit, even if they do not pay a dividend. This is new in Estonia.
The tax increases are temporary and valid until the end of 2028.
2. Ministerial changes
The Prime Minister will therefore change from Kaja Kallas to Kristen Michal. Michal’s climate minister’s portfolio will be given to a member of parliament from the Reform Party Yoko Allender.
The Minister of Finance is also changing. A first-time minister Mart Võrklaev is allowed to retreat and an experienced one enters the ring Jürgen Ligi.
He is about to become the Minister of Justice and Digital Affairs Lisa from Pako From the Estonia 200 party.
A social democrat will get the position of the brand new infrastructure minister Priit Lomp. Thus, the Social Democrats get what they want, i.e. one more ministerial position.