Neivelt: Business support should be stopped at European level

Entrepreneur Indrek Neivelt said that it is in principle unacceptable to support businesses, especially at a time when young families are in need. However, in a single European market Estonia cannot take this step without jeopardizing the competitiveness of local businesses, he said.

ERR asked Neivelt to comment on the National Audit Office's report to the Ministry of Finance, which revealed that data bottlenecks inhibit thoughtful and transparent business support. Nevertheless, corporate subsidies are inherently flawed, Neivelt argued.

"Why should businesses receive government assistance? We can't afford family allowances, so why should entrepreneurs receive them? Europe has a zero birth rate, yet we subsidize entrepreneurs instead of young families. Our young families cannot afford to purchase a home, but we encourage entrepreneurship instead," Neivelt told ERR.

"From an ethical point of view, money should not be given to businesses, but to those in greatest need. Or say it is for this purpose only," he added.

"Entrepreneurs are dominant alfas in the herd, so to speak, and if you feed them, cage or transform them into zoo animals, entrepreneurship dies out."

"We are now seeing this cage where businesses operate being made even smaller. It is happening in other areas as well. There are more restrictions than there were in Soviet times," he said.

Neivelt said that subsidizing companies increases their dependence on the state and reduces entrepreneurial freedom.

"How long does it take to make one detailed plan? And then we ask why the apartments are so expensive... There are a million things to go through. Even more regulations are in the works and soon it will just be lawyers communicating with each other — some lawyers in business and others in government," Neivelt said.

Neivelt went on to suggest that we need to end all business subsidies at European level.

"Let's stop it all, let them see for themselves how they get on," he said. "So raise less money in taxes, or give it to those who cannot manage on their own. But businesses must be able to manage on their own. This is a fundamental issue."

Asked whether Neivelt himself would like to run for the European Parliament next year, Neivelt replied that not.

"We are discussing [creating] a personalized state [in Estonia] and eliminating kindergarten and childbirth allowances for [presumably] wealthy people. We will not pay out these €100 million [in family allowances], but we will give another €100 million to entrepreneurs who have already €100 million in their accounts. This model does not work, and this type of socialist expansion will result in ruins," Neivelt said.

Another issue with business support, the entrepreneur pointed out, is that the market evolves quicker than the support's fundamental objectives and decision-making processes.

"If you receive [Enterprise Estonia, or] EAS funding, you will ultimately receive the funds, but by that time your business idea will have taken on a life of its own. Then on paper you must give the impression that nothing has changed, whereas in reality, everything has evolved; alternatively, they then have to refuse to receive the funds in question."

The National Audit Office recently informed the Ministry of Finance in a formal letter that the completeness and usability of the data on financial assistance to Estonian enterprises leaves much to be desired.

In total, according to the National Audit Office, the state has given more than €4 billion to more than 36,000 Estonian companies through dozens of different agencies over the last 10 years.

However, there is no overview of the efficacy of the subsidies or even the reasons why specific companies received them.

The analysis shows that the largest recipients of state support are Tallinn Airport, Eesti Raudtee, Utilitas Tallinna Elektrijaam OÜ, Elektrilevi, Gren Eesti AS and others. The ranking also reveals that the majority of the largest beneficiaries are energy companies.


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Editor: Aleksander Krjukov, Kristina Kersa

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