Tallinn, March 24 Estonia's ruling coalition has pledged to strengthen national defence by increasing military spending and reinforcing NATO's role in the country's security.
The incoming government's commitment was outlined in a new coalition agreement signed Monday. It also urges Europe and its allies to boost defence expenditures, according to a government press release.
The government, a coalition led by the Reform Party and Eesti 200, plans to raise Estonia's defence budget to five per cent of GDP or two billion euros (2.2 billion US dollars) annually.
On taxation, the agreement includes abolishing the two per cent corporate income tax introduced as a "security tax" while increasing personal income tax and turnover tax by two percentage points.
Prime Minister Kristen Michal is set to present the new cabinet members to the President, including several new ministers from both parties.
The government reshuffle comes after the three-party ruling coalition collapsed earlier this month, as the Reform Party and Eesti 200, which hold 52 of the 101 seats in the parliament, decided to stay in a two-party government without the Social Democrats.
"Two words justified the end of the coalition: so that the Reform Party and Eesti 200 can pursue right-wing policies," said Social Democratic Party Chairman Lauri Laanemets after a coalition council meeting.
He cited the Reform Party's low rating as the second reason for the coalition's collapse.
The Social Democrat's leader called the party's exclusion from the government "a stab in the back."
Prime Minister Michal (Reform Party) said later at a press conference that the new coalition, in which only the Reform Party and Eesti 200 remain, intends to abolish the corporate income tax to be introduced from January 1, 2026.
"The first thing we plan to do is to cancel various tax increases, including the corporate income tax. We will prepare a bill to this effect," Michal said at the press conference on the change in the coalition's composition.
"Another wish is to reduce the tax burden on individuals. Income tax was supposed to be levied on the first euro from next year, but this will not happen. Income tax will increase to 24 per cent, but it will not be levied from the first euro," Michal said.
The Estonian government, formed by the ruling coalition comprising the Reform Party, the Social Democratic Party, and Eesti 200, was officially established in July 2024.
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