What Got You Here, Woun't Get You There!
Another post on the Estonian industrial policy.
Firstly, and I must say, Mr. Kattel is impressing me again. What about this quote “Niisiis oleme müstifitseerinud kogu innovatsiooni- ja majanduspoliitilise debati, mille tagajärjeks on heal juhul Nokia ihalus või lihtsalt labane kraaklemine või ärplemine meie maksusüsteemi ja muu sellise pärast. Ilmselt on meie kõige suure probleem ülbus ja suutmatus tehtud vigu tunnistada ning neist õppida. Poliitikakujundamise kvaliteeti näitab alati see, kui palju osatakse vigadest õppida. Meil sisuliselt puudub süsteemne õppimine ja ka tahe selleks. Oleme olnud enda arvates eksimatud. Eesti Nokia sõi ära meie kollektiivne neoliberaalne ahnus.” (EPL on the 31. of December) Bit ruff again, isn’t it? I kind of agree that our economic policy is not based on a collaborative discussion (with our enterprises), but then again I believe that with a 17-year history we have done damn good. I also say that there are signs of this initial collaboration - take for example the new initiative by the ministry of economic affairs (financial support scheme) or the concept of national R&D programs, which is based on close collaboration between the enterprise and government. To add, I think about ten years ago any closer discussion would have led to serious accusations from the public. You must always bear in mind that there are two types of businesses in Estonia (think of the Reiljan case for example)….
Secondly, and this has been on my mind for quite some time now, what I would like to write about is the “Estonian untouchable tax system”. In fact, I like what they are doing in the US right now: making tax exemptions to companies: A) who export, B) who create new jobs. See for example this: http://news.bbc.co.uk/2/hi/business/7818347.stm or the BusinessWeek about Obama’s economic agenda. I honestly believe that this new “time” of ours, needs even smarter and vigorous policy approaches. We need to understand how to create new stimulus and pump new ideas into our economy to create new or expand the competitive edge where we have it. Innovation year is good, but what are the means? Creating tax exemptions on maybe labor taxes, eliminating income tax on option schemes (to create extra momentum in employers), looking how to create transparent investment funds (to lure venture capital) into Estonia instead of them going to Luxemburg or any other financial heaven, should be our target now. 0% tax on reinvested profits is good, but probably not good enough in the current terms. In fact if you look at the EU tax system, then Estonia is not the only one with a flat tax rate and the so called 0% tax exemption any more. As I said before, what got you here, won’t get you there. There’s always some extra bit that you have to do, to reach the next level.
This statement from Veskimägi is exactly to the point: “Teiseks, mina usun, et meid toovad sellest kriisist välja mitte-konventsionaalsed lahendused Eesti senise 17 taasiseseisvumise poliitikaga võrreldes. Ja üks valdkond, kus see lähenemine võiks olla edukas, on finantspoliitika. See võib tähendada muuhulgas loobumist senisest maksupoliitilisest lähenemisest, mis on põhinenud ilma eranditeta laial maksubaasil koos madalate määradega. Peame leidma kompromisse maksusüsteemi stabiilsuse ja magusamaks tegemise vahel uuele kapitalile." (Äripäev, 05.01.2009).
Glad that there is a discussion at least. Now, the idea is, how to sell these little issues that actually matter in today’s context, to the public and then to the rest of the political elite.
Firstly, and I must say, Mr. Kattel is impressing me again. What about this quote “Niisiis oleme müstifitseerinud kogu innovatsiooni- ja majanduspoliitilise debati, mille tagajärjeks on heal juhul Nokia ihalus või lihtsalt labane kraaklemine või ärplemine meie maksusüsteemi ja muu sellise pärast. Ilmselt on meie kõige suure probleem ülbus ja suutmatus tehtud vigu tunnistada ning neist õppida. Poliitikakujundamise kvaliteeti näitab alati see, kui palju osatakse vigadest õppida. Meil sisuliselt puudub süsteemne õppimine ja ka tahe selleks. Oleme olnud enda arvates eksimatud. Eesti Nokia sõi ära meie kollektiivne neoliberaalne ahnus.” (EPL on the 31. of December) Bit ruff again, isn’t it? I kind of agree that our economic policy is not based on a collaborative discussion (with our enterprises), but then again I believe that with a 17-year history we have done damn good. I also say that there are signs of this initial collaboration - take for example the new initiative by the ministry of economic affairs (financial support scheme) or the concept of national R&D programs, which is based on close collaboration between the enterprise and government. To add, I think about ten years ago any closer discussion would have led to serious accusations from the public. You must always bear in mind that there are two types of businesses in Estonia (think of the Reiljan case for example)….
Secondly, and this has been on my mind for quite some time now, what I would like to write about is the “Estonian untouchable tax system”. In fact, I like what they are doing in the US right now: making tax exemptions to companies: A) who export, B) who create new jobs. See for example this: http://news.bbc.co.uk/2/hi/business/7818347.stm or the BusinessWeek about Obama’s economic agenda. I honestly believe that this new “time” of ours, needs even smarter and vigorous policy approaches. We need to understand how to create new stimulus and pump new ideas into our economy to create new or expand the competitive edge where we have it. Innovation year is good, but what are the means? Creating tax exemptions on maybe labor taxes, eliminating income tax on option schemes (to create extra momentum in employers), looking how to create transparent investment funds (to lure venture capital) into Estonia instead of them going to Luxemburg or any other financial heaven, should be our target now. 0% tax on reinvested profits is good, but probably not good enough in the current terms. In fact if you look at the EU tax system, then Estonia is not the only one with a flat tax rate and the so called 0% tax exemption any more. As I said before, what got you here, won’t get you there. There’s always some extra bit that you have to do, to reach the next level.
This statement from Veskimägi is exactly to the point: “Teiseks, mina usun, et meid toovad sellest kriisist välja mitte-konventsionaalsed lahendused Eesti senise 17 taasiseseisvumise poliitikaga võrreldes. Ja üks valdkond, kus see lähenemine võiks olla edukas, on finantspoliitika. See võib tähendada muuhulgas loobumist senisest maksupoliitilisest lähenemisest, mis on põhinenud ilma eranditeta laial maksubaasil koos madalate määradega. Peame leidma kompromisse maksusüsteemi stabiilsuse ja magusamaks tegemise vahel uuele kapitalile." (Äripäev, 05.01.2009).
Glad that there is a discussion at least. Now, the idea is, how to sell these little issues that actually matter in today’s context, to the public and then to the rest of the political elite.
posted by Oliver at 10:30 AM
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