TALLINN – The three-party ruling coalition in Estonia collapsed on Monday, as the Reform Party and Eesti 200 decided to stay in the two-party government, excluding the Social Democrats.
Social Democratic Party chairman Lauri Laanemets said this on Monday at the end of the coalition council meeting.
“Two words justified the end of the coalition: so that the Reform Party and Eesti 200 can pursue right-wing policies,” Laanemets said.
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 Kristen Mihal (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 Jan. 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 percent, 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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