Opinion digest: Current approach to reform won't help municipalities
The Center Party’s presidential candidate, Mailis Reps, wrote in an opinion piece published in daily Postimees on Sunday that the Administrative Reform Act was a disappointment to Estonia’s municipalities, and that relations between local and central government were in a crisis.
Reps wrote in her piece (link in Estonian) that it wasn’t surprising that local governments all around the country were doing badly. Campaigning for the votes of the municipalities’ electors, she had visited some 180 of them during the past months, Reps added, which had given her a pretty good idea of the current state of things, as well as local worries.
The last few governments had followed a policy of cutting back local governments’ income. After in 2009 they had to accept a smaller share in income tax paid by residents, the shrinking of the school network, and after the rigorous downsizing of available services, dozens of municipalities were bleeding residents and actually running out of people. Marginalization of these communities had become a real issue, Reps wrote.
The income base of the municipalities had never been raised to pre-crisis levels. Temporary cuts had the bad habit of becoming permanent, Reps said. Add the agricultural crisis of the past few years, the effect of trade sanctions, the reform of the school network, and the mix of problems gets harder and harder to fix.
The Administrative Reform Act passed in June this year was still being debated, and though the new law dealt with a matter that had been discussed for two decades, paradoxically it had come without any substance at all, Reps pointed out. The 18 complementary bills announced in spring were still nowhere to be seen, and not a single bill of any substance had made it to the Riigikogu, she complained.
As president, Reps wrote, she wouldn’t have signed the bill into law, but sent it back to parliament.
According to her, the Center Party isn’t against reform on the whole, but doesn't see that half-measures and reform for the sake of reform make sense. The changes, Reps wrote, needed real substance, clearly defined roles, and a tax reform needed to be considered as well.
Reps also pointed to the fact that Estonia doesn’t levy corporate taxes, which means that it doesn’t have the possibility to use local tax exceptions as an incentive for companies to move away from the country’s major centers. Reps suggested to introduce a corporate tax at 12%, of which again 30-50% would go directly to the municipalities.
This would give the state the chance to actually influence regional development, for example by attracting companies to a particular area by offering it tax exemptions. This would also mean tightening the screw on local politics, as they would need to create an environment favorable for business, Reps wrote.
She reiterated that the first step to be taken was to give the municipalities their pre-crisis income back, which meant raising the share of income tax local authorities receive from the current 11.4% to 12-13%. Also, especially as the government had since raised excise duties on fuel, the central government’s contribution to the maintenance of local roads needed to be brought back to pre-crisis levels.
Time and again the local communities had to take cutbacks, Reps pointed out. The rescue service, police, post offices, schools, they all had been affected. According to Reps, the Administrative Reform Act and its territorial reorganization of the country would likely make even more schools and kindergartens disappear.
And with the services disappearing, the people would leave as well.
The government could no longer base its decisions on the opinion of a select few, Reps stated. Instead, she suggested, the state should call expert councils that include people from outside politics — the sciences, business, culture, local governments, and representatives of political parties would discuss matters of local importance.
Estonia was made up of strong communities, Reps wrote, but voluntary individual contribution wasn’t an acceptable basis for the state. Also, if the municipalities weren’t allowed their income, more and more of the public services would have to be based on voluntary action — and people tended to resign their causes when they realize that their effort isn’t appreciated.
According to Reps, the time of “fine-tuning” policy and what she calls “substantive indecision” is over. This government couldn’t handle substantial change or reform anymore. Still, Reps stressed, substance is what really mattered, and things could only improve if systematic and well-considered change was implemented.
The opinion piece “Mailis Reps: praegune haldusreform omavalitsusi ei aita” was first published in Postimees on Sept. 18, 2016.