Friday, July 13, 2012

And now for something different.

I'm going on vacation (motorcycle trip up to Nordkapp) and suddenly realized that my European medical insurance card - proof of insurance that gets me free healthcare anywhere in the EU and EEC - expired two years ago. Previously it was sort of irrelevant, because I had good travel insurance, but on this trip there's very little to insure - ferry tickets are cheap, and hotel bookings are usually free.

So I go on the Estonian state services portal, X-road, and order a new card. But it's going to take some time to get here, and I leave within a few days. I go to the health insurance authority's website and find that I can get a replacement certificate immediately at any of their regional offices, it's only valid for 3 months, but does the same things as the card, and it's also free. Excellent.

So I go to the Tartu office, and have a really weird interaction with the lady at the service desk. An older woman, she speaks to me in a really stern and loud voice. That leaves an unfriendly impression. But once I quickly explain to her what I need, and that I've taken all the other necessary steps (ordered the new card online, etc.), she quickly and efficiently prints out the certificate and explains to me all the relevant stuff - such as that it's in Estonian, but that's fine, because every country in the EEC prints them in their own language based on a common template, so a hospital will know which row contains which bit of info. A perfectly efficient and successful interaction that took me about three minutes from walking into the building, including finding the service desk itself. The only weird thing was the lady's tone.

Now, this is the point where a Mingus or a Vello Vikerkaar or a Justin Petrone might launch into a philosophical treatise on the Estonian psyche and the nature of customer service in this country. Mostly I've dismissed such wonderings - foreigner friends have told me about weird interactions they have had at places where I had no problem at all, so I generally think it's down to Estonians not being able to quickly parse the English of a visitor, or their non-Russian-accented Estonian: the clerk expects the foreigner to have, by default, a non-trivial problem, and experiences a brain freeze. But what was the weirdness in my interaction all about? The lady's tone didn't change all throughout the conversation, even though she understood what I needed before I even finished explaining, and in every other way her attitude was very efficient and helpful.

I thought about it for a while, and then it hit me. This is the administrative office of the health insurance agency. It exists for people who can't get their issue resolved online, for whatever reason. I was the outlier, the person who needed a piece of paper to be used abroad, a piece of legacy, backup technology for those venturing outside the cool, efficient environment of E-stonia. But who makes up the majority of the service desk's clientele? The elderly and the confused, people who can't figure out the Internet, or people who are just bored and come there with pointless queries to get some human interaction. The clerks at the healthcare authority have naturally trained themselves to speak slowly, loudly and succinctly, to convey information to people who are probably hard of hearing. And even when it's not necessary, they can't actually stop. And it wouldn't make sense for them to change their mental patterns just for a few minutes, for a rare type of customer.

It still feels weird, though.

Thursday, July 12, 2012

Of Banks, Thanks and Tanks

Further to this:

There is an ever-louder discussion of why exactly Estonia should help bail out the Southern Eurozone countries. Here's a link to an interview with our Finance Minister (in Estonian). Although the current cabinet is full of people who often speak more directly and more insultingly than most European politicians, and Ligi is one of those people, I think there is room for an independent voice to provide more clarity still.

We're part of the bailout because Germany wants us there, and why Germany is willing to bail out those countries is actually irrelevant to Estonia's own internal political discussion. Estonia has benefited very heavily from European solidarity in financial terms. Being on the other side of that solidarity now, helping out others instead of just receiving help, not only repays some of the moral debt we owe to Europe, but accrues moral credit. We're pulling our weight, even though it's a difficult thing for us to do, and we have good short-term reasons not to do it. It makes the rest of the continent see us as an integral part of Europe. It is a favor we're doing, and the fact that we're not doing it for our own obvious gain is what allows us to expect a favor from Europe at some indeterminate point in the future. And that's where it comes down to the unspoken but well-understood, and well-founded, paranoia that underlies Estonia's political discourse, the ultimate purpose that the failing, dysfunctional, spent generation of Estonian statespeople still understands far better than the millennial generation which takes Europe for granted.

A strong bond with a weak Europe is still Estonia's best geopolitical choice.

Today, Estonian money protects Spain's banks; so that tomorrow, Spain's tanks would protect Estonia's borders.

Wednesday, July 04, 2012

How would this work, exactly?

There's a common argument that making taxes too high just leads to sneaky rich people squirreling away their capital in tax havens. The argument is, on the face of it, compelling: a huge number of filthy-rich Brits are not domiciled in the UK, meaning that they don't pay income tax to Her Majesty's Customs & Excise. Conversely, the new French president is talking about a 75% income tax on top earners, leading to the British PM saying he, for one, welcomes his new cheese-loving donors. I'll leave you to ponder just how much money a French tycoon is willing to pay just to avoid moving to London.

But does that work with the Estonian tax model? Since corporate profit gets taxed at the point it becomes someone's income, is it really possible to put the money in a bank in Grand Cayman and tell EMTA to go to hell? Yes, an investor gets his dividend in a lump sum and is personally responsible for setting aside the tax until it's due. But let's assume I took all the money and moved it abroad, to a place where the Estonian government can't get their hands on it.

What about next year?

The tax man knows exactly how much tax I owe, because the corporation is submitting its own records. If I am behind, enough for the tax man to really take an interest, surely he just orders the corporation to stop next year's dividend payout, and confiscates it to cover the taxes due.

This could get quite difficult in countries that attempt to tax one chunk of earnings multiple times, such as a tax on a person's net worth, or the notional appreciation of their non-liquid assets. Once somebody's moved their cash offshore - the clean cash, on which all the proper taxes have been paid - and continues growing that capital, either through deposit interest rates or stock market investments via offshore-based funds - it can be very hard to get a clear idea of just how much money they have at any one point. But Estonia only taxes actual income, at the point that it is converted to cash.

Leaving aside the issue of payroll taxes. Property taxes in most of Estonia are minuscule and only pay for the administration of the county clerk's office; this year, mine was too small for them to bother collecting. There is no inheritance tax. Capital gains of some types are charged as income - for example, buying a condo and selling it shortly after for more, if you can't prove that you actually lived there, the price difference is treated as income. I'm not sure how sales of artwork by private individuals are taxed, if at all. There is no car tax or pet tax, if we're getting really ridiculous.

I am genuinely interested. Is capital flight really an issue of loopholes, or simply of shoddy enforcement? I don't seriously believe the richest Estonians are paying their full share of tax, even though that share is the same as the rest of the country. I'm just trying to figure out the hole in my argument.

An investor won't abandon a working, profitable business just to avoid one year's tax. This is borne out by the convincing argument that the US has had tax rates of over 90% in the 20th century, and indeed, nobody's going to say, "if I make money on this deal, I'll have to give a lot of it to the government; so out of spite, I'll leave the deal and make no money at all!"

And to the French captains of industry: Welcome to Estonia! Our income tax is 21%, for everyone. And if we have to, we can learn to cook our snails and frogs.


| More