Thursday, January 24, 2008

New Year's resolutions Estonia should make

Estonia has followed Scandinavia's trend of banning smoking in indoor public places.* Great.

There's so much more that can be done. Little things that make life better for a greater number of people. Things that hew to principles that help make the world a better place.

Ending alcohol sales at 8pm is not one of them, of course. It's narrow-minded, reactionary and not consistently applied. But the point is it was done. It was possible, in one fell swoop. There was grumbling, but people got used to it. Banning alcohol in Tallinn seems quixotic to an extreme, but for three or four days last year, sales were banned entirely. And (to way oversimplify) people stopped rioting.

The items on this recurrent list are just as possible. In the great division of things of the Serenity Prayer -- things we have the power to change and things we cannot -- these are things we should NOT be serene about. We should do them (or start doing them) and get it over with.

1. "Torpedo" the container terminal planned at Muuga. And boycott Chinese goods in general.

I couldn't believe there was no negative reaction to the news the day an agreement with China's fourth largest port was signed, at least not in the two major dailies. This port serves only two purposes: entry of more Chinese goods into Europe and sweeteners for Estonian port officials.

I realize Estonia's government consists largely of former reform communists, but how can anyone even remotely aware of Baltic history condone our coziness with the People's Republic? It causes me physical pain. It is as if we are sending Estonian troops into Lhasa to smash Buddhist temples, over and over again.

What you can do -- if you think that you are not going to be able to stop a port the size of the Kopli peninsula from being built -- is look at the labels when you go to the store and say no, if you can. This is one country that no one should be supporting due to its record on human rights and the environment, least of all bloggers or people who read blogs.

No one even remembers, but some of the Baltics had diplomatic relations with Taiwan. The day they were cut off is a unexplained blot of shame.

2. No tax on reinvested profits. Rather than establish a 10% tax, which won't endear us to the EU and will generate a lot of headaches for companies starting next year -- at a time when the economy is slowing -- Estonia should continue on its same course. Don't tax money that stays in. Tell France and Germany to stuff it. Instead, maybe establish a 10% social tax on dividends (not 33%), and establish better tax audits. And of course, go after those companies that haven't submitted an annual report in four years.

3. Just abolish the presidency already. Estonia now has a repatriated-expat president, de rigueur for the Baltics lately. Let him be the last one. It would be understandable if the president retained some constitutional power, even as the "midwife of democracy", but Ilves has even abdicated the president's role as commander-in-chief of the armed forces. He might as well step down now.

Estonia has enough rich people and a nice healthy gap between the haves and the have-nots, like most countries. We don't need one more symbolic fat cat with a country home and a palace in town, who does I-don't-know-what all day on taxpayer time. The only thing I am aware of is that he contributed recipes to culinary magazines and occasionally he pops up with a statement or speech on holidays and events in which he seems to be speaking for all Estonians.

Under the 1920 Constitution, Estonia didn't have a de jure head of state. Let's be unique that way again.

Unless we have a war hero who has led forces into battle against the Russians. No one else should have ten years paid for by us.

And I won't entertain arguments about how lobbying and intelligence activity are the equivalent of such heroism, though I'm sure they played an important role in hastening the demise of the USSR like so many demolition charges placed in a condemned building.


* Apart from the fact that non-smokers don't have to smell other people's trash fires while we are eating, even many inveterate smokers-drinkers are happy -- they say a break outside revitalizes a long encampment at a public house just as well as changing venues does on a pub crawl.

8 comments:

Flasher T said...

how can anyone even remotely aware of Baltic history condone our coziness with the People's Republic?

Any empire is evil. We have to deal with empires anyway. Under equal circumstances, we'd prefer to deal with ones that are half way around the world. (Which is why we're supporting the US in Iraq.)

Max said...

Estonia didn't have a head of state for a long time in the first independence era. Let's be unique that way again.

Point of order, Meester Blogmeister: Estonia did so have a Head of State during that incarnation. Between 1921 and 1937, the office of Riigivanem (lit: Elder of State) combined the roles of president and prime minister.

Kristopher said...

Thanks, Max. I'll admit I was vague on it.

But 1918-1921? Aha! ;)

Will correct.

Flasher T: Iraq was going to be #1 on my list but things like this and this give me pause. Can't even say "bring the boys back home" without a mess of trouble.

Empires, sad but true. Maybe we could export something to China, too. Dust masks, humanitarian assistance. Like when we bailed out Ivangorod with water.

Andres Sehr said...

2. No tax on reinvested profits.

This is the one place where I feel Estonian tax law has let in a loop hole.

Countless number of people set up firms and put their cars, houses, cottages, etc into the name of the firm so in the end, everything they do becomes a reinvested profit and they pay little tax. Perhaps taxing isn't the best option but tightening up that provision is probably necessary going forward.

Toomas said...

Taxing reinvested profits??? What a way to kill business incentive and entrepreneurship. I am one of those countless people. In spite of driving vehicles bought from profits, along with tools and equipment bought again all from profits reinvested, I would venture I pay more in taxes in spite of getting a free ride from some "reinvested profits." Those vehicles and tools and equipment, that I buy and write off as a business expense, all had a sales tax added. All the materials and supplies I consume also has a sales tax. And then the vehicles, tools, equipment and materials I purchase provides employment for my help and the subcontractors' help, and on down the line providing employment to my vehicle manufacturer, the tool and equipment provider, the material supplier, etc. I guess you get the drift. I suppose I also contribute to global warming with my consumption, but then if all these people having jobs were without, the pollution might be even worse from all the bon fires under bridges.

If the government were to tax my reinvested profits, I might become a smaller venture, using less and thus contributing less, and perhaps even work under the table carrying a big roll of bills in my pocket to the supply houses and reporting no income at all. So let me reinvest my profits and have my free ride and other perks, because it all provides more overall to the government. And I still pay a hefty sum on profits to boot.

Kristopher said...

I'm wondering if I was a little careless with terminology in the original post.

What Estonia is planning to do for the first time starting next year is tax retained earnings.

Legit business expenses are safe for now. (And we have enough bonfires as it is.)

Though as Andres Sehr points out, people play fast and loose with expensing.

Toomas said...

Fast and loose with expensing?? There are controls and safeguards, but if it is within the law it is within the law. Certain abuses will trigger an audit. But keep in mind that us entrepreneurs contribute a lot to the economy, but at the same time we also risk a lot of personal capital. Whether we can write off the losses entirely is questionable, but if we do have losses do we ever recover all of it, tax breaks or not? The sweat and agony is not tax deductible. But if we are successful, then the government wants a piece of it. But the government also needs to encourage us to take those risks to keeps it's wheels lubricated, so that their employees can drive government vehicles, get travel expenses paid for Mickey Mouse events and to periodic vacation destinations....and presidential mansions. Perhaps Estonia can't afford all those perks to the privileged and so needs to tax the hard working.

Kristopher said...

Certain abuses will trigger an audit.

Exactly, but not so much in Estonia.

I'm not saying increase the percentage of random audits of small businesspeople. That's a pain.

If a small firm has a few employees or pays at least some social tax, and does its financial reporting as it is supposed to, I support the libertarian ideas you advocate.

But if someone has set up a company just to get 18% off their summer home, that is a "certain abuse"...and should be looked into.