* One more Th!nk3 article. Need to pick up the pace.
* I'm not going to talk in detail about the 750 billion Euro rescue plan, here's a good start - the non-trivial bit there to which I want to call your attention is the fact that the ECB will now start buying Eurozone bonds on the open market. Effectively, the sovereign debt of EU member states will be taken over by the EU's central authorities. It won't be a huge shift, at least for now, but it can be very significant in the long term: a way for the EU's main contributors to impose their will on indebted countries via a means that is entirely outside the EU treaties and protocol. The ECB is supposedly independent, but let's face it, the countries that are responsible for most of its budget are also responsible for most of its policy.
* A curious scenario of differentiating between the trustworthiness of Germany and Greece without destroying the Eurozone. Probably won't happen as described, but might be implemented in part, at least on a perception level.
* Comedy Estonia is back in Tallinn! June 9th, 8pm, at Drink Baar. Tickets should be on sale today for 75eek. Tickets at the door will be more expensive and limited. Drink is not a huge space, so if you're interested, get yours soon. All-new sets from your favourite comedians (including yours truly), plus some new faces.
* It is increasingly likely that we will be having a big comedy show in Pärnu as part of the International Hansa Days. June 25th-26th. If you're around at all, come and see us perform, we'll have an excellent lineup there. Yes, yes, I know it's just after Jaanipäev, it's not like you're going to work on Friday anyway.
* You may have noticed the No Peanuts! banner to the right there. I've translated the manifesto for them into Estonian, and have joined the directory. It's a good cause and I agree with their principles entirely.
Monday, May 31, 2010
Thursday, May 20, 2010
Newish Th!nk3 article.
Meanwhile, nobody signed up for my wannalunch thing, and since the Wannalunch website is actually paying the Moka bill, I'll still be there tomorrow at 1pm. Come hang out. Have a free lunch.
Meanwhile, nobody signed up for my wannalunch thing, and since the Wannalunch website is actually paying the Moka bill, I'll still be there tomorrow at 1pm. Come hang out. Have a free lunch.
Thursday, May 13, 2010
Tax Wedge
Hot on the heels of the European Commission's positive recommendation on Estonia joining the Euro from next year, comes another news: Estonia has been invited to join the OECD.
I'm not clear enough on what we're supposed to do in the OECD to discuss the implications, although one interesting point I've heard is that with the Euro and the OECD invite, Estonia is very nearly out of targets. There are no more obvious landmarks of Western integration that we need to strive for. The only one left is membership of the Nordic Council, which is an issue of prestige and self-perception rather than any tangible economic benefit: we're already integrated into the Scandinavian economy pretty darn well.
Here's an interesting link, though: the tax wedge in OECD countries. It's a parameter that describes how much tax a household is paying, as a percentage of income; the rules for calculating it are designed to make it both representative, and comparable between countries.
The tax wedge is the difference between the money that the household receives, and the money that the employer spends on them. OECD's calculations also include any additional money that the household might get - such as child benefits. The numbers in the link don't include Estonia yet, so I did some calculations of my own, using the stat.ee database. The latest number they had on the average salary was for Q4 2009, and it was 12 259 EEK across the country. Palk.crew.ee tells me that with all taxes, including pension contributions (which I've chosen to include), that comes out to 9692,25 net. The child benefits are 300 EEK per month, for the first two children.
The most relevant and interesting demographic in my opinion is that of the two-adult, two-child household where one adult makes 100% of the average wage, and the other makes 33% of the average wage.
Labour cost Take-home pay Tax paid (percent)
1st parent 16 476,10 9 692,25 41,17388217
2nd parent 4 871,37 3 198,44 34,34203314
1st child 300,00
2nd child 300,00
Total 21 347,47 13 490,69 36,80425596
The Estonian household has a tax wedge of 36.8%. The OECD average is 36.5%. The country with the closest tax wedge to ours is Portugal, at 37.2%.
Next, let's look at a household where both parents worked, and one of them is receiving the mother's salary - since women still earn less than men on average, we can map this to OECD's numbers for the second adult earning 67% of the average wage:
Labour cost Take-home pay Tax paid (percent)
1st parent 16 476,10 9 692,25 41,17388217
2nd parent 10 760,35 6 493,81 39,65059222
1st child 300,00
2nd child 300,00
Total 27 236,45 16 786,06 38,36914319
The Estonian household has a tax wedge of 38.4%. The OECD average is 31.3%. The country with the closest tax wedge to ours is Sweden, at 39%.
Now, let's have a look at the Estonian yuppie, living alone, holding down a good job - 167% of the average wage with no children:
Labour cost Take-home pay Tax paid (percent)
One adult 28 080,82 16 186,06 42,35902833
The Estonian household has a tax wedge of 42.4%. The OECD average is 41.1%. The country with the closest tax wedge to ours is Portugal or Norway, at 43%.
You can keep playing with the numbers to see the situation that is of most interest to you. Conclusions? Despite all the talk of Estonia's very high labour tax, it's actually about the same as the average of the world's most powerful economies. We're about at the median for OECD members, and on the lower end of the spectrum for those that are also in the EU.
These numbers don't represent the VAT paid on purchases, which in Estonia is fairly high at 20%, or the excise on things like alcohol, cigarettes and fuel. However, Estonia does not have road tax on vehicles, and property taxes are very low. There is also no inheritance tax, and for the most part, no capital gains tax on investments such as real estate that appreciates in value. (Investments in financial markets are taxed as income, 21% of the difference between purchase and sale price).
Incidentally, here's a good overview in English on how Estonia's social/unemployment benefits system works. (Some of the numbers are outdated, such as the unemployment insurance contribution, which has grown to 1.4% from the employee and 2.8% from the employer.)
I'm not clear enough on what we're supposed to do in the OECD to discuss the implications, although one interesting point I've heard is that with the Euro and the OECD invite, Estonia is very nearly out of targets. There are no more obvious landmarks of Western integration that we need to strive for. The only one left is membership of the Nordic Council, which is an issue of prestige and self-perception rather than any tangible economic benefit: we're already integrated into the Scandinavian economy pretty darn well.
Here's an interesting link, though: the tax wedge in OECD countries. It's a parameter that describes how much tax a household is paying, as a percentage of income; the rules for calculating it are designed to make it both representative, and comparable between countries.
The tax wedge is the difference between the money that the household receives, and the money that the employer spends on them. OECD's calculations also include any additional money that the household might get - such as child benefits. The numbers in the link don't include Estonia yet, so I did some calculations of my own, using the stat.ee database. The latest number they had on the average salary was for Q4 2009, and it was 12 259 EEK across the country. Palk.crew.ee tells me that with all taxes, including pension contributions (which I've chosen to include), that comes out to 9692,25 net. The child benefits are 300 EEK per month, for the first two children.
The most relevant and interesting demographic in my opinion is that of the two-adult, two-child household where one adult makes 100% of the average wage, and the other makes 33% of the average wage.
Labour cost Take-home pay Tax paid (percent)
1st parent 16 476,10 9 692,25 41,17388217
2nd parent 4 871,37 3 198,44 34,34203314
1st child 300,00
2nd child 300,00
Total 21 347,47 13 490,69 36,80425596
The Estonian household has a tax wedge of 36.8%. The OECD average is 36.5%. The country with the closest tax wedge to ours is Portugal, at 37.2%.
Next, let's look at a household where both parents worked, and one of them is receiving the mother's salary - since women still earn less than men on average, we can map this to OECD's numbers for the second adult earning 67% of the average wage:
Labour cost Take-home pay Tax paid (percent)
1st parent 16 476,10 9 692,25 41,17388217
2nd parent 10 760,35 6 493,81 39,65059222
1st child 300,00
2nd child 300,00
Total 27 236,45 16 786,06 38,36914319
The Estonian household has a tax wedge of 38.4%. The OECD average is 31.3%. The country with the closest tax wedge to ours is Sweden, at 39%.
Now, let's have a look at the Estonian yuppie, living alone, holding down a good job - 167% of the average wage with no children:
Labour cost Take-home pay Tax paid (percent)
One adult 28 080,82 16 186,06 42,35902833
The Estonian household has a tax wedge of 42.4%. The OECD average is 41.1%. The country with the closest tax wedge to ours is Portugal or Norway, at 43%.
You can keep playing with the numbers to see the situation that is of most interest to you. Conclusions? Despite all the talk of Estonia's very high labour tax, it's actually about the same as the average of the world's most powerful economies. We're about at the median for OECD members, and on the lower end of the spectrum for those that are also in the EU.
These numbers don't represent the VAT paid on purchases, which in Estonia is fairly high at 20%, or the excise on things like alcohol, cigarettes and fuel. However, Estonia does not have road tax on vehicles, and property taxes are very low. There is also no inheritance tax, and for the most part, no capital gains tax on investments such as real estate that appreciates in value. (Investments in financial markets are taxed as income, 21% of the difference between purchase and sale price).
Incidentally, here's a good overview in English on how Estonia's social/unemployment benefits system works. (Some of the numbers are outdated, such as the unemployment insurance contribution, which has grown to 1.4% from the employee and 2.8% from the employer.)
Tuesday, May 04, 2010
Short-term plans
1) Wanna lunch? A way for readers to get involved in Th!nk3. We'll talk about issues of the developing world and what people in Estonia can do to help. I'll probably bring a camera and make it into a podcast or video for the site.
Essentially I set this up because the website is giving away free lunches to those who make them creative. I'm hoping to win. But if people respond, I'll do the lunch anyway, even if I have to pay for it myself. Also: TANSTAAFL.
2) Tartu Comedy will be back! The two shows at Vilde and one at Tallinn's Drink Baar were absolutely awesome. Eric, Stewart and yours truly are working on new material, which we will present at the Open Mic night in Möku on May 25th. If you want to try it out, this is the time and place to do it! We always want to see new people, and developing a standup comedy scene in Estonia is something we're very passionate about. So if you think you have what it takes, prepare a short set (3 to 5 minutes) and contact us.
Essentially I set this up because the website is giving away free lunches to those who make them creative. I'm hoping to win. But if people respond, I'll do the lunch anyway, even if I have to pay for it myself. Also: TANSTAAFL.
2) Tartu Comedy will be back! The two shows at Vilde and one at Tallinn's Drink Baar were absolutely awesome. Eric, Stewart and yours truly are working on new material, which we will present at the Open Mic night in Möku on May 25th. If you want to try it out, this is the time and place to do it! We always want to see new people, and developing a standup comedy scene in Estonia is something we're very passionate about. So if you think you have what it takes, prepare a short set (3 to 5 minutes) and contact us.
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