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What is hindering your business in Estonia?

THIS PUBLICATION HAS 19 COMMENTS
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Slash the 33% social tax for one thing.
Make it easier to hire non-EU citizens for another. Reply to the comment answer
~zebber [05.03.2012, 11:27]
To start to being with, we should get away from all these phony employer contribution fiction of dedicated taxes and call ti what it actually is: income tax.

Then people would start to realize how much of their salaries are taxed away actually.

And then we can start a discussion based on that.

In other words: Let's talk about the payroll tax, best of all, how to get rid of "payroll taxes" altogether.
~knut albers [05.03.2012, 12:09]
I know it is a bit sluggish comparison, because the fiscal situation in the U.s. is a bit different, but on general terms, Nick Gillepsie brings down the whole thing about "payroll tax" quite qaccurately in this interview:

http://www.youtube.com/watch?v=wUYHCIPKx2g
~knut albers [05.03.2012, 12:51]
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Estonia needs to get rid of the paranoid ethno-loony paranoia, work harder, & behave like the Dutch.

Move away from the bunker/prison mentality and make everything possible for ANY foreigner who wants to trade there in whatever language they need.

Everything is forbidden unless it's authorised. With this mentality a country will never go anywhere.

"You can't do this, you can't do that", and it has to be in Estonian.

Estonia is a country with very little future. Better to delocalise to India. Reply to the comment answer
~Estonian nutters [05.03.2012, 12:04]
I strongly disgree with you that Estonia has no future. Sure, if we do not reform this country any further, it may lead to such a situation, but it does not have to be like this.

Adn it is pretty easy to stress that giving people more freedom in their personal and economic lives leads to better material outcomes.

And if the legal status (of leanguage, citizenship, et cetera) is the question here, then yes, let us make it easier, not harder, to be legal here.
~knut albers [05.03.2012, 14:34]
It looks, like you are moving out of here soon! Where are you going to relocate?
~Jon [05.03.2012, 20:09]
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Estonia has thousands of often worthless government agencies and employees that have to be paid. The gov. employees, the few hours a week they actually work, sit around thinking up new rules to make life more complicated for business people and to give the government employees job security because their desks are piled high with years of paperwork. Something that can take minutes in the civilized world can take weeks/months or years in Estonia. Reply to the comment answer
~Est. Nutters@ [05.03.2012, 12:23]
Andrew Napolitano brings it to the point:

"The government should protect us from force and fraud and then leave us alone"

Source: http://www.youtube.com/watch?v=cghfhpMjhDk
~knut albers [05.03.2012, 13:15]
You mean like the time I had to wait nearly 6 months for a surgery back home in London?
~@ [05.03.2012, 13:53]
ah, already the "yeah but what-about..." crowd have arrived.
~:-[] [05.03.2012, 14:21]
I think that the problem in both countries is the lack of a free market in medicine. Estonia's constitution mandates the State that people must be provided healthcare, but it does not state that this must be managed by the state (which acts, as we already concluded, inefficent and hence costly with poor results - leading e.g. to long waiting lines).

I think that getting government out of healthcare management and getting the market in on behalf of the State would lead to the same sort of increased access you see in, say, food (during Sovie time, in Estonia the food chain was managed by the State, resulting on shortage or even total absense of goods you could not even imagine to be unavailable since the private and free market kicked in two decades ago).
~knut albers [05.03.2012, 14:24]
This is a good point and one I've brought up before -- the local governments are too vast and have too many workers. Even small towns of 3,000 people have a town council and local government. I say these should be consolidated so it's all handled at the county level, except for the 5 largest cities.

However, I don't think this is a hindrance to business -- it's just wasteful.
~ameeriklane [05.03.2012, 18:47]
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Knut, i think if you would put all the energy you waste here at BBN into the working process for your current employer (FireWrong), then you could probably be promoted one day. Seems that you live in a fictional world here - you are not an entrepreneur nor politic of any kind, just to remind you. Reply to the comment answer
~angry_bird [05.03.2012, 16:50]
Hear Hear! (And don't forget the comments pages at ERR!)
~second the motion [05.03.2012, 17:14]
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After some second thoughts over night and to serve as an good example in hope that others would contribute some common sense to that, here are my answers to the questions asked in the article:

"How could Estonia become more business friendly and rise in the Doing Business list instead of falling?"

Communication with the government has to be clearer and bills that are passed should be understood. The engine of the economy for innovation and future companies, however, are small businesses. There is a lot more government can do to help them than to simply reduce taxes. For example, to improve access to capital. Many lenders discriminate against small businesses and some state loan programs have requirements that small businesses fail to meet. Also, reconsider regulation, because every time government creates another law or regulation, another burden of cost of compliance is added to the business community. Regulation increases opportunity costs and creates barriers to entry the market. The cost of compliance increases the overhead disproportionately for small businesses as compared to larger businesses, though. Since most regulations are tested for compatibility on corporations only, they are often not scale appropriate to small businesses. That brings us to the point that businesses spend an enormous amount on insurance because of that. If we end nannyism and demand more personal responsibility, then insurance costs would decrease. Other important things to consider are to end corporate welfare, to encourage local business clusters and to create a business friendly climate where small scale local businesses are promoted in the same way that big businesses are promoted and to ensure adequate competition in the market place. Finally, VISA programs must be reformed as the labor market in Estonia is fairly limited and often can not offer the actual needs of business owners.


"Have you thought of what is inhibiting the freedom of your business to reach its full potential?"

Strongly fluctuating and temporary tax plans create uncertainty in any business development.


"Is it a national requirement or limit or a municipal restriction that is too demanding? Are those restrictions rational and proportional?"


A 14 day pre-notice VAT increase on national level and a 1% "normative" tax rule on retail sales on municipal level in Tallinn interfere with business safety plans and are hamrful interventions to the domestic market, to mention a few of them.


"Could the regulation be changed to better support your business?"

Taxation should be designed targeted and long-term. A 33% employer"social tax" contribution from the first EURO earned in addition to the 21% employee income tax is unreasonable, unjust and seems phony, as there is already unemployment insurance paid from both, the employer and employee in addition to that and the social benefits are minimal in Estonia (68 EUR a month), so the money is partly spent elsehwere not intended in respect thereof. Estonia with its roughly 1.3 million inhabitants has more than 200 municipalities, consolidation is the key element in order to reduce taxes used for purposes other than intended and frees the assets for capital investment to increase of profit that would create more jobs in the free and the private market place.


"How could Estonia be transferred from a “good” regulatory policy development trend to a “wise” regulatory policy development trend?"



The internet, freedom to travel and food trucks are a direct result of deregulation. So, we must reduce the size of government and the burden it's placing on the future. If the government can not mastermind the economy, it always simply can get out of the way or set certain kind of frameworks that allow for bigger grow. One of the frameworks could be to create a tax system where innovaters that are creating new products and the companies of the future are not penalized. Well, one thing government did right in this respect is to abolish corporate tax, but I would like to see this on all the phony employer contribution dedicated taxes also, so there is room to grow in the fields of businesses that are costly in terms of labor that would rather reduce the unemployment to a greater extend other than keep them in a state of dependence to unemployment benefits and other forms of social benefits.


On a side note I would like to add that it is a pleasure to me that I have some readers that are even cross reading my (and my alleged) comments, but please do yourself a favor and invest your and my valuable time with your own contributions and ideas to the community instead of wasting your time on rumors about my private and business life. Thank you. Reply to the comment answer
~knut albers [06.03.2012, 08:43]
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~fasdfa [07.04.2012, 06:28]
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What is hindering me? The future. Reply to the comment answer
~scheileke [03.08.2012, 20:17]
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Corruption and provincialism (limited view) are hindering foreign investments. We reduced our manufacturing to less than 10% of what originally was in i.e. 2000. Reply to the comment answer
~foreigner [06.08.2012, 13:19]
I suspect that it is more due to the fact you can't wait Malyasian-level wages here than anything else.
~@foreinger [06.08.2012, 14:22]
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