Crocodiles set to get teeth into red tape

Kadri Hansalu
, majandustoimetuse juhataja
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Photo: Hannes Virkus / MKM

Pulled by economy and communications ministry, the state and business bodies are again about to cut bureaucracy i.e. reporting burden of entrepreneurs. Businessmen recall this has been attempted before with nothing much achieved. Now, it is vice chancellor Taavi Kotka at helm of the initiative - a man already in limelight by kicking off big projects like e-residence. Will he really be able to break the bureaucratic machine? 

This June, all state agencies vitally linked to administrative load got together to discuss how to cut reporting by businesses. The aim isn’t some small changes but a radical reform – as at 2013, the public sector featured 201 various reports and declarations, to which add Statistical Office and Eesti Pank reports. And this, say all those involved, is too much.

Brainstorming done, two trends emerged and got grandly Christened «D-Day or Restart Day» and «Reporting 3.0».

The former means that professional associations will collect proposal by members regarding superfluous reports or data rows which will be forwarded to agencies dealing with data; and, finally, the proposal with state-level substantiation lands on the «crocodiles committee» table.

The committee is composed of representatives of entrepreneurs and public sector, who economy minister Kristen Michal vows will be the particularly mean kind. «We’ll rather take the stand that if the need for something cannot convincingly be argued, we will delete the reporting. In essence, what will happen is the review and deletion of the entire inheritance. No need to collect data just because we have always collected data,» said Mr Michal, visibly elated by the project.

The aim is for entrepreneurs and the state to establish constant communication about it and that the latter would feel pressurised to shrink the reporting. «A measure of reporting is needed, naturally, but the issue is to what extent. Where do we draw the line? If somebody gets the idea to ask for some kind of data, should all entrepreneurs indeed take the load,» asked Mr Michal.

By December already, the initial proposals are planned to be collected. «In January, then, we’ll get the teeth going at the crocodiles committee,» said Mr Michal. The other direction is automated reporting i.e. a new e-Tax Board which is supposed to mainly make reporting as easy for SMEs as doing the taxes currently is for private persons.

The system would be voluntary and for a small business it would be enough to categorise its transactions. Tax Board Marek Helm says they want to create a solution where an enterprise must not enter their environment to forward data, but could send the data directly from its bank or bookkeeping programme.

Mr Helm would assure us this will not mean they will gain constant access to data and bank accounts of businessmen. «The goal is that on the 20th of each month no-one should sit down at the table and submit an e-declaration to the Tax Board. Today, this is not needed. The bookkeeper would simply work with her system and would tell it to forward the selected data on the specified date and time,» described Mr Helm.

In addition to receiving the declaration, Mr Helm would go as far as to even provide feedback to entrepreneurs about the environment he is currently operating in, which are the region’s overall wage level and trends.

Construction of the new e-Tax Board has already begun, but Mr Helm says it will probably take a couple of years. Also: regarding the general reporting Mr Helm says there’s plenty to cut and that he as the man at helm of Tax Board will guarantee that the change in bureaucracy and the need for documents will be as radical as can be. «A change is a change if it is a shaking, see,» said Mr Helm.

Entrepreneurs think back to such processes initiated in times past to not much avail. Why would it be different this time around? Mr Michal says we must definitely try. «This is like at a disco, inviting a girl for a dance: if you ask her not, the answer is definitely no. If we don’t begin, nothing will definitely happen,» he said.

«However naive or idealistic the idea, the revision must be done. With the process in place of how to critically review the reporting, then even with few proposals submitted the first year, the next year there will be more.»

Taavi Kotka believes that this time it will work because the entrepreneurs have been involved so they need to have an input. Up to now, even if entrepreneurs have sent their suggestions, the state has simply answered them and nothing has changed. Now, however, an arbitral tribunal is added. «Let’s not waste a good readiness. If it were not different from what has been before, I would agree and say forget it and let’s do as we have always done – fruitlessly,» said Mr Kotka to counter the scepticism in businessmen.  

Mr Kotka would underline that economy ministry has developed a process but by nature this is a public administration issue for which there currently exists a separate minister who agrees to assume part of the tasks.

Mr Kotka said enterprises are key factor, the proposals by which will enter public discussion. «I’m a software engineer and my task is to solve problems by technology. But the executors are professional associations – if you find fault, good, shoot! The state has opened a public dialogue,» he said.

But actually Mr Kotka does not think the entrepreneurs will suggest too much. «Largely, the state is okay. There are the some nasty things that strike the eye, but all the rest is okay,» he added.


Mait Palts, CEO of Estonian Chamber of Commerce and Industry

I’ve seen rather many initiatives where they up and get to cutting red tape enthusiastically. Not infrequently, some sort of insight has been gained and at times stuff has been cut, but the most remarkable examples date back over a decade as administrative load linked to VAT Act was assessed and when the result emerged no-one dared to publish it – it was so vast.

Now they are about to get serious again and well let’s hope it will help. Actually, for quite a while we have been saying for instance that cross-usage of state databases must be a priority. Regrettably, it’s still that everyone has their own databases somewhere. What are we talking about when till today Statistical office and Tax and Customs Board cannot cross-use their databases.  

There is the business secret issue, for instance, but we don’t think that’s too big of a problem. It would help, to start someplace to cut the administrative load. I cannot tell if near-term anything will begin to change as the IT-developments are a rather lengthy process. But a picture of the reporting they require of us must be created anyway.  

What the ministry and Taavi Kotka proposed is let the entrepreneurs say what is not needed; but we have brought such proposals before, for years, and usually where they end up is some officials will nicely explain why it is needed and we will have nothing much to say after that. They will always find some reason.

It is vital to provide an overview what is required of us, and from there we can sift out spots where the data is repeated and without even asking anyone we could get rid of it. And, sure, we are a bit fearful about how many the proposals will be. When we talk to an entrepreneur, he is often worried when some definite report pops up, or there is something that needs to be done that is tough. And there are also the horizontal problems that may not necessarily surface with such interviews. But well let’s hope for the best – hope always dies last.