Why are the economies of Lithuania and Latvia growing, while Estonia is still in the red? Should we expect an economic recovery in the second half of the year? How long can taxes be raised?
- The state must be a major customer
- Taxes should not be raised in difficult times
- Buying ammunition is only half the battle
Why are the economies of Lithuania and Latvia growing, while Estonia is still in the red? Should we expect an economic recovery in the second half of the year? How long can taxes be raised?
The prominent Estonian businessman Urmas Syõrumaa answered rus.Postimees' questions in the studio.
Excerpts from the conversation :
– Foreign markets have already begun to grow, including Lithuania and Latvia, but our economy is still in the red. Why?
– The Estonian economy was affected by attempts to maintain financial balance, so that we would have fewer loans and so on. This is the course pursued by the Reform Party. I always had a different opinion. I'll explain why.
When the whole world is printing money, taking loans, building roads and infrastructure, Estonia claims that we are in a different boat. However, in times of economic downturn and financial crisis, we say that we are all in the same boat. Well, then you need consistency: you need to be in the same boat with everyone until the end.
In difficult times, the state should help the economy. Namely, to be a major customer, develop infrastructure and not raise incomprehensible taxes.
Taxes should be raised when everyone is happy. And certainly not when things are going badly. If a cow gives a lot of milk, then why send it to slaughter?
– Do you have any hope that with the change of prime minister and renewal of the government, something will change for the better?
– Hope dies last. I have a fairly deep understanding of the life of our political parties over the past 25-30 years. I believe that the best time for the reformists came precisely during the period when Kristen Michal was the general secretary of this party.
– True, then he had to resign from the post of Minister of Justice due to a scandal with the financing of the party…
– There have been and will be scandals, there is no escape from them. However, I still hope that Kristen Michal will lead the government with cold calculation, and then we will begin to grow the economy.
– The future prime minister made it clear that tax increases will continue. At a minimum, a five-year defense tax will be introduced…
– The state should live off taxes, and not through competition with private entrepreneurs. Taxes must be clear and understandable. And certainly, do not fall into a common pot, like the same car tax. The latter should go exclusively to improving the lives of motorists, enhancing traffic safety and building roads. The general purse must receive turnover tax.
Of course, there may also be a defense tax. However, I repeat that all taxes must be clear and understandable to the population.
By the way, everyone knows from school that if two-thirds of the population agrees to pay taxes, then there is no need to create a huge state apparatus that checks and punishes at every step. When people understand how much their lives will improve due to these taxes, then everything starts to work on its own.
Let's look at the ministers who lead us. Most of them do not even have life experience; they have achieved nothing anywhere. These are just good party functionaries who think that they already know everything. However, life doesn't work that way.
If 101 parliamentarians suddenly find themselves unemployed tomorrow, I am sure that only 10–20 of them will be able to find work. And these people tell us today that they know everything.
– How long can taxes be raised?
– Taxes must be competitive in comparison with other economies in Europe and around the world. If taxes are too high, losing is inevitable.
– Opinions are heard quite loudly, including from the Bank of Estonia, that if taxes are not raised, then we will have to give up free education, healthcare, and so on. Is this a realistic prospect?
– There is some truth in this. It is obvious that a small country like Estonia can no longer be led like this. This is the path to bankruptcy. A tiny country cannot participate in world life, in the EU, NATO and other international organizations, taking on obligations on an equal basis with all large countries. This is simply impossible!
If we want to be world-class players, then we need to do things differently at home. In a small country you can try a lot.
A small country like Estonia can no longer be led like this. This is the path to bankruptcy.
It has already been said that people could pay for a number of municipal and state services themselves. For example, as a businessman I am involved in the development of real estate projects. If I do detailed plans and make money from it, then why spend more public money on reviewing these plans?
I am ready to pay for the entire review process myself: five euros per square meter. If I have 50,000 sq. meters, I am ready to pay 250,000 euros so that the approval of my detailed plan is not carried out by all officials at once for public money, but by a specific official – for my money. And so that detailed plans are approved not for 10 years, but for three years, and for a specific letter or proposal to be answered not in four months, but in just a month.
Let's look at the healthcare sector. The Finns have estimated that their state budget is being deprived of 5–7 billion euros due to senseless diseases that could have been avoided. This is when people lead an inactive lifestyle, do not move, abuse alcohol, do not watch their diet, etc. I think that Estonia is also losing a lot on this: from 500 million to a billion euros. The reason is that people get sick, are on sick leave, receive treatment from the general treasury, etc.
This problem can be solved. It is enough to simply allocate an additional 100 million euros to motivate these people to be healthy.
There is a lot of debate now about how to defend the country and where to get the missing money. It's one thing to buy ammunition. And who will shoot? In the country, only 30% of young men are able to meet the minimum physical fitness standards. Solving such problems requires an integrated approach.
Watch the interview on replay!
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Postimees studio: what's wrong with the Estonian economy? Photo: Madis Veltman
- How can we explain the rise of the Lithuanian economy and the relatively stable performance of Latvia?
- Why did the crisis hit Estonia the hardest?
- How long will Estonia remain Europe's champion in inflation and GDP decline?
- Is it possible not to raise taxes? What are the alternatives?
- When can we expect an economic recovery?
