However, to avoid misunderstanding, we draw attention to the fact that when comparing the efficiency of tax and customs administrations of Latvia and Estonia it is necessary to consider a number of objective factors.
It was on the initiative of the SRS in the framework of cooperation of the Baltic States in 2014 launched the project "Comparative assessment of the Baltic States (Estonia, Latvia and Lithuania) in the field of tax and customs administration and the fight against crime". However, representatives from all parties acknowledged that such a comparison is problematic and difficult due to different legal regulation and practice of tax administration.
If we want to compare the quality and costs of tax and customs administrations of Latvia and Estonia, it is necessary to consider several important factors. For example, in Latvia and Estonia somewhat differently, normative acts and the tax administration. Customs and tax administration in the two countries has a different organizational structure, tasks and functions, what affects the established scope of responsibility and competencies (including the territorial location of the country). Therefore, superficial comparisons of certain indicators (e.g., costs of collecting one Euro or number of employees of the institution) does not provide a complete and objective presentation. On this in their statements also suggested by the European Commission and the Organization for economic cooperation and development.
Equally important, how is the budget of the tax administration of the two countries. When calculating the cost of collecting one Euro in most cases considers the costs of three categories — administrative costs, payroll costs and costs for information technology.
In Latvia the budget IT is included in the SRS budget (in 2015, 15.4 per cent). In Estonia, the budget of tax and customs administrations included in General budget of the Ministry of Finance. Thus, the costs of tax administration Estonia is not visible to the General picture of the costs of IT.
Secondly, while in Estonia, as in Latvia, tax and customs administration is integrated, the processes of the maintenance is centralized mainly in the Ministry of Finance. This means that in Estonia the tax and customs administration independently performs the functions of its core activities (administration of taxes and customs, the fight against tax and customs crimes). For the successful operation of the institution is not less important processes centrally by the Ministry of Finance of Estonia (managing Finance, accounting, management information systems, administration, communication technologies, etc.). For information management and communications systems in Estonia have created a separate Center for information technology (Information Technology Centre for the Ministry of Finance), performing functions in Latvia implementing Management Informatics SRS. This means that the costs of these processes are not included in the budget of tax and customs administration of Estonia.
Should take into account the fact that Latvia has 27 customer service centers of the SRS, and in Estonia — almost twice less, only 16. It is not only that area of the country, but a different number of taxpayers and uneven coverage of services in the public sector, which are often treated from the point of view of politics, not efficiency. In Latvia there is a more fragmented structure of taxpayers, i.e., there will be many more actors in the economic activity in a very small volume (124 of 129 subject, while in Estonia — only 32 283). Naturally, this requires Latvia, including from the SRS, more resources.
It is also important that the administrative costs of manual increases the circulation of documents between state institutions. And this is despite the government's decision about the use of documents with safe electronic signature. Unfortunately, for example, the statement on commercial insolvency is still unable to file electronically. Separate courts do not accept documents with an electronic signature. Besides, in Latvia it is still a large proportion of individuals who prefer to perform their obligations to the state personally. In 2015, 41% of individuals filed an annual income Declaration in paper format (in Estonia 95% submit returns in electronic form only). I must admit that in the use of IT Estonia a step ahead of Latvia. This is evidenced by the report of the world economic forum on global technology in 2015. There Latvia is 33rd, and Estonia — 22 in the world. Historically, because of 2000-ies of state institutions in Estonia have been concentrated on its core functions, and IT was offered as an external service. In Latvia and Estonia, state institutions often used their internal resources.
Impact of geography
Given the different length of the land border (Estonia 294 km, Latvia — 407 km), Latvia has 23 points of customs control (5 — at the external border), and in Estonia — 11 points (3 — at the external border). It is important to note that Latvia has borders not only with Russia but also with the Republic of Belarus, where often enters a large amount of illegal cigarettes. Our country is often used as a transit state.
The allocation of liability
To objectively compare the two companies should evaluate their scope of responsibility and competence. Here, too, there are significant differences. In Latvia the SRS performs a number of functions that are not included in the management processes of the tax and customs Estonia. For example:
- Identification of constituent entities of the Law on combating legalization of criminally acquired assets and the financing of terrorism, accounting and supervision. In Estonia this is a separate Bureau of the police.
- Granting and withdrawal of status of a public benefit organization.
- All functions associated with cash registers (registration, accounting, etc.).
- The functions associated with state property.
- The functions of the customs laboratory in Estonia is engaged in the research Center environment).
- Stop and cessation of economic activity, the maintenance of the list of addresses/individuals to the risk, etc.
If we compare equivalent and seemingly similar functions, very different number of events organized by one or the other tax administration. For example, in 2015 the state revenue service has given taxpayers 534 reference, and the tax and customs administration Estonia — only 13 help (help is the answer of enterprises to the question how in the circumstances subject to law. The goal of reference — to provide advice about how, in the opinion of the institution, a private individual should act in particular situation, these actions were considered legitimate). By the way, all references in Estonia, unlike Latvia, is a paid service.
Another example: in 2015, the SRS has provided taxpayers 494 357 telephone consultations, while the Estonian colleagues half — 251 232. As for written consultations, their SRS of Latvia has provided 86 612 taxpayers, which is almost three times more than in Estonia (31 885). Experience shows that unclear questions taxpayers most often associated with a lack of understanding of laws or regulations and frequent changes in them, and not with lack of knowledge or imperfection of the work of the SRS.
If you compare the open and prevented crimes, it is seen that in Latvia in 2015 as a result of work of the SRS 690 was uncovered significant violations, including the plan attempts to import drugs. In Estonia it was disclosed 163 significant crimes.
Customs officials of the SRS of Latvia withdrew 136 686 607 of smuggled cigarettes, while the Estonian colleagues — about eight times less (16 568 096). SRS Latvia also sent to prosecution twice criminal trials (123). Estonian colleagues for the year transferred for criminal prosecution 40-50 processes.
Thanks to the development of the digital environment in Estonia many functions for a long time fully or partially automated or carried out without unnecessary bureaucratic delays. In turn, these delays often are required by regulations.
One of the important processes of tax administration to which the SRS annually allocates significant resources, it is a refund of overpayment of income tax from the population on the basis of income declarations. In Estonia this time-consuming process for several years are fully automated, as data from employers, banks and other government agencies are received in electronic form. Therefore, when filing the Declaration does not have to make supporting documents. In Estonia also include lower expenditures for which you can return the overpayment of personal income tax. For example, the privileges do not apply to medicine and dental care, as it is a free choice of each person. SRS Latvia for several years, calls for a review of the system, but to no avail. Currently the SRS is once again preparing for submission to the Ministry of Finance his vision of how to make the process more efficient.
Another striking example of the administrative burden — the process of applying administrative fines. In Estonia it is automated — residents are not invited for a personal meeting for a decision. If the taxpayer continue delaying the filing of the Declaration, it is automatically sent to the administrative record. In Latvia the responsibility for the failure to return is applied according to the norms of Code of administrative violations. For each entity, a Protocol, assessed the aggravating or mitigating circumstances, a decision is made. To do this, a person is invited for a personal meeting.
In my opinion, significant resources are spent on ineffective procedures for merchants who for some reason have registered economic activity, but several days not start. Legal acts oblige the SRS to make the Declaration and related (including empty) of such taxpayers (and we have almost 100,000!). Great resources from the SRS tre