Tallinn University of Technology

Could the state budget be made as transparent as the budget planner of an online bank and how to do it? Professor Ringa Raudla of the School of Business Governance from TalTech answers the question*.

Ringa Raudla
Professor Ringa Raudla

The article was published on the Estonian news portal Novaator

The Estonian State Budget Act has indeed become less transparent in recent years. The State Budget Acts of 2020 and 2021 were only six pages long. You will not find such a short budget in any other democratic country. The reason behind these short budgets was the objective to make the use of budgetary resources as flexible as possible and to give ministers as much freedom as possible over the programmes in their areas of government.

In response to the criticism of the Riigikogu, the draft budget for 2021 is somewhat more detailed and information is also provided on the costs of various programme activities. This will certainly give members of the Riigikogu, as well as citizens a better overview of spending targets.

At the same time, it is worth bearing in mind that in Estonia we actually have a lot of information about what the money is spent on, however, it is not that easily understandable or accessible to the public. For example, the explanatory memorandum to the draft state budget, which the government submits to the Riigikogu together with the budget, contains important details, but this text may be difficult for citizens to understand.

Ministries and agencies, however, keep very detailed records of expenditures on various services, as well as inputs categorised by economic content, such as payroll costs, management costs, and allocations. In order to obtain this information, a member of the Riigikogu or a taxpayer interested in the subject must submit a request for information.

Two proposals to change the situation

I would like to make two proposals to further increase the transparency of the state budget.

  1. First, expenditures of public authorities on various services, as well as the scale of such expenditures, could be made publicly available based on economic content without a request for information.
  2. Secondly, in addition to the State Budget Act and other official documents, state budget information could be presented to the public in an attractive and interactive format, where those interested could simulate the impact of various decisions on state budgetary expenditures and revenues.

With the information currently available, such a solution could be created, but it would require close cooperation between designers and budget specialists. This would allow citizens to better understand the impact of different policy proposals and thus make more informed choices in elections.

In addition, the more taxpayers understand how their tax revenue is being used, the more motivated they are to pay taxes.

*As of October, the researchers of Tallinn University of Technology answer the questions of readers of the ERR science news portal Novaator on topics that require clarification or are of current interest.