The People's Union responded to an ultimatum by its coalition partners, Res Publica and the Reform Party

The People's Union responded to an ultimatum by its coalition partners, Res Publica and the Reform Party, by declaring its desire to remain in the coalition but not withdrawing its demands to change the three-party coalition agreement. As if to highlight the growing rift, the People's Union voted with the opposition the same day to back amendments to a tax-reform bill that would fundamentally change the legislation. The amendments were backed by 54 of parliament's 101 deputies. The government responded by pushing through a suspension of the second reading of the tax-reform bill. Pro Patria Union Chairman Tunne Kelam has meanwhile insisted that any potential coalition with his party be preconditioned on the suspension of income-tax reform, making the replacement of the People's Union by the Pro Patria Union with Res Publica and the Reform Party unlikely. Res Publica Chairman and Prime Minister Juhan Parts met with his coalition partners late on 19 November, when, according to "Postimees," he suggested a compromise that would entail cutting the income-tax rate from 26 percent to 25 percent in 2004 -- instead of the proposed 24 percent -- and allocating more funds for family benefits and education, and speeding up administrative reform.