Cutting back on social and family benefits today entails much steeper spending to address the effects of deepening poverty in the future. It is a systemic problem preventing which would be both cheaper and socially fairer, Mihhail Kõlvart writes.
Even though Prime Minister Kristen Michal (Reform) has publicly said that the government’s defense tax decision should be the end of the so-called festival of taxes, the reality will be quite different. Taking a closer look at the state’s funding decisions and fiscal policy, we soon learn that the promise of tax stability is merely seeming. Hard-coded into the government’s recent decisions are new tax hikes in the near future, with both future cabinets and everyone in Estonia left facing the consequences.
Based on available information, most cuts will hit the social, education and culture domains, which form society’s foundation and help support national development in the future.
The long-term consequences of such austerity measures can be compared to security risks, as a weakening education system and dwindling cultural identity work to lessen our competitive ability, while weaker social protection deepens poverty, which will end up costing the state an arm and a leg.
Dialing back social benefits, cutting unemployment insurance funding and saving on road maintenance will only alleviate the fiscal situation briefly, while putting more pressure on the public sector in the long run.
More read: ERR.EE