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Employers: Municipalities need tax revenues in their budgets, which can only come from entrepreneurship

Employers see improving of the local business environment and attracting investments with high added value to municipalities as the priority for developing local life, as people expect high living standards and rewarding jobs in every corner of Estonia. Ahead of the local elections, employers have formulated their own proposals to both local and national governments.

Employers express their deep concern that in recent years, excessive restrictions and protests have made it extremely difficult to expand any kind of business and construction activity in rural areas, jeopardising Estonia’s economic development and accelerating peripheralisation.

‘Municipalities should compete for new investments and jobs, and not lightly turn them away. When investments disappear, jobs, schools and kindergartens disappear as well. This is why attracting investments with high added value and job creation in the municipality take priority,’ said CEO of the Employers’ Confederation Arto Aas.

Municipalities need to speed up and simplify the planning process so that new investments do not get bogged down in excessive bureaucracy that drags on infinitely. Attracting new investments starts with an open and flexible attitude from the heads of local government.

Not all decisions improving the local living and business environment are in the exclusive competence of local governments. The majority of these changes require effective cooperation between national and local governments. Employers see the optimisation of the school network as one important area for cooperation.
‘The quality of general education could be significantly improved and teachers’ salaries raised by optimising the school network, because the high quality of education depends more on good teachers than on distances,’ stressed the CEO of the Employers’ Confederation. 

Employers also recommend the state to create a direct financial incentive for local governments to develop the business environment and attract foreign investments. This concerns environmental taxes, personal and corporate income tax, and reviewing the principles of the equalisation fund. The redistribution of revenues through the equalisation fund should also consider the number of new jobs created in the municipality. According to employers, it is important that the development of the business environment is already defined in legislation as a mandatory task for local governments.

According to employers, it is necessary to increase the public procurement capacity of municipalities and harmonise the quality of services to businesses, through centralisation or in cooperation with public authorities, where necessary. ‘The main criterion for procurements should not be the lowest initial price, but the whole life cycle cost and quality. Smart procurements facilitate innovation and environmentally friendly solutions,’ said Arto Aas.

In cooperation with the state, state reform, including the reform of local services, needs to start. Make service delivery in local governments more sustainable through public service innovation, service centralisation, and outsourcing from the private sector.

Proposals of the Employers’ Confederation to the heads of state and local governments in the context of the local government council elections held on 17 October 2021 can be found HERE.


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