Growing defense costs would leave Estonia with no other option but to introduce a security tax in the coming years, the EU country’s Finance Minister Mart Vorklaev said on Tuesday.
The Estonian government had already agreed to increase the nation’s defense budget to 3% of GDP between 2024 and 2027, up from 2.85% last year, and sharply up from NATO’s 2% threshold, as it seeks to counter a supposed threat from Russia. The former Soviet republic, which shares a 284-kilometer border with Russia, joined the EU and NATO in 2004.
Vorklaev was commenting on an initiative by Estonian Defence Forces’ chief General Martin Herem, who earlier this week proposed increasing his country’s defense spending to 5% of GDP. According to Herem, this would enable Tallinn to buy €1.5 billion worth of ammunition to “deter Russia or destroy its infrastructure” in the event of an attack.
Speaking to news outlet ERR, Minister Vorklaev said that when allocating 5% of GDP to defense, Estonia would have to introduce a broad-based security tax, adding, however, that the new tax would not be introduced until 2026.
The proposal has already sparked criticism, with Vadim Belobrovtsev, a member of the Center Party parliamentary faction, saying he could not imagine where €1.5 billion could come from. Authorities should keep the national economy in focus and think about “how we get out of this economic hole,” the politician said.
Last year, the Baltic country’s GDP decreased by 3%, to €37.7 billion ($40.8 billion), data shared by Statistics Estonia shows.
Estonia, along with Latvia and Lithuania, has been on the frontline of the West’s confrontation with Moscow since the beginning of the Ukraine conflict in 2022.
Earlier this year, multiple senior officials from NATO member states, including the UK, Germany, and Estonia, alleged that Russia was planning an attack on the bloc within the next few years.
Moscow has consistently denied the claims, with President Vladimir Putin insisting that Russia “has no interest … geopolitically, economically or militarily ... in waging war against NATO.”