State budget, the very process of its formation and adoption is the essence of real policy. Because it’s about money. Because the state budget will provide an answer at least next year to the question: who will win, how much and what, and why? Or, on the contrary: who will lose, how much and what, and why? It should be clarified that this will be not only the budget or the law on the state budget for 2021, but the whole “budget package” – a set of draft laws, where the amendments are intended to implement the state budget.
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Broadly speaking, the state budget is about how society, first and foremost, the voters will benefit. Very cynically at all times, the formation of the state budget (at least definitely in Latvia) has been a struggle for the salaries of teachers, medical staff and police officers. Respectively, the struggle for the favor of the coalition, which is directly dependent on the state budget, but which still forms a relatively large electorate.
This also means another important thing: the priority is not the industry itself, but first and foremost the favor of its employees towards the policies pursued by the government. Thus, the salaries of teachers, police officers or doctors will always be a priority, rather than increasing funding for reimbursable medicines, reorganizing or optimizing the network of schools and the State Police structure, or digitizing school curricula. I have chosen these three groups as illustrative examples, although their number can, of course, be supplemented, for example, by farmers, whose economic activity and favor to the government may very much depend on public policy.
The basic problem is different: a sustainable or, in modern terms, sustainable education, health care and national security system can be created and maintained if the 3 main components of it are proportionately balanced: workers and their remuneration, the infrastructure used and its condition (medical, school, police network in the country) and the tools at their disposal – medicines, equipment, teaching aids, transport, etc.
The state budget is a compromise. A compromise on a great deal: on the interests of parties and individual party representatives (including legitimate and fair ones), on the need for change and optimization, on maintaining the “status quo” (because by inertia many are always better off than they are ready for change) , on the need to devote more resources to equipment, tools and resources than to remuneration. Most often, this leads to a discussion about the need to increase taxes and fees, which may also result in a fall in these particular tax revenues or in the sacrifice of some logical and self-evident thing.
Therefore, my story is precisely that the state budget best reveals and demonstrates the true interests, goals, real principles of operation and techniques used by the participants of this process in the budgeting process of the parties, factions and deputies represented in the Saeima. In short: the budget will often reveal the true “face” of policy makers.
Consideration of the state budget is also the right time to talk about interest representation or lobbying. I would like to say that it would be more correct to use the term “representation of interests” in Latvian, which is more precise and correct and which does not have a negative social stratification. Thus, lobbying or interest representation is part of any normal democratic decision-making process. First of all, it must be said that, in essence, lobby organizations or lobbyists are the “Society for Transparency” Delna “, the Latvian Medical Association, the Latvian Association of Local Governments, etc. Such non-governmental organizations in Latvia are given the widest opportunities to participate in both the law and decision-making process. The second thing is professional lobbying, that is, when it is a paid job or service performed by individuals or companies. In addition, I have come across cases where even non-governmental organizations, including those mentioned above, also involve professional lobbyists. The state budget reveals the operation of these lobbies very well. Because it’s about money.
As a member of the Saeima belonging to the “non-coalition”, I can now notice and understand much better and more neutrally what is happening, how and why. Therefore, I will tell about the case that led me to apply to the KNAB with an application.
The short story is that not long ago, in the autumn of this year, the foreign company “Japan Tobacco International” (representative office registered in Estonia) presented several proposals to the Saeima Budget and Finance (Tax) Committee on the need to increase excise duty through local interest representatives. heated tobacco (by 190% over the next 3 years), which could provide additional revenue to the state budget. A similar initiative to increase excise duty on all tobacco products, including heated tobacco, was also taken by the Ministry of Finance itself, offering to set a rate for the specific product that would be proportionate to the rest of the Baltic States. After a while, identical proposals, as expressed in the presentation of “Japan Tobacco International”, followed from the deputies of the Saeima, mostly from the deputies of the JKP and NA, who submitted them in the so-called package of state budget laws, providing these funds for oncology. It is particularly interesting that one of the submitters of the proposal, the deputy Indriksone, publicly admitted (in the TV show “Nekā personīga”) that he had submitted these proposals on the proposal of the Adviser to the Prime Minister on Demography Imants Debtor.
It is worth recalling the Debtor’s previous legislative initiatives in the field of excisable goods, which is also an excellent example of how state budgeting and figures can be manipulated. Savulaik, 2017/2018. In 2006, the Debtor encouraged and achieved an increase in excise duty on cigarillos – allocating the planned additional revenue to address demographic issues. It should be noted that the current procedure determines – if something requires additional funding, then the source must be indicated accordingly – formally and mathematically. Contrary to formal calculations, the amendments adopted by the Saeima actually created significant “minuses” in the revenue section, at the same time funding for the demographic issues curated by the Debtor remained.
In my opinion, the Debtor acts as a representative of a particular company, trying to achieve a favorable tax regulation for a particular company, more precisely, unfavorable to competitors and the state budget. What is even worse, however, is that I think that the care of oncology patients on the part of these proposers will remain just an empty slogan when we hear public statements from the Minister of Finance that oncology is unlikely to receive any additional funding. Manually manipulating slogans about human health in an attempt to achieve a very favorable but destructive tax regulation for others is, in my opinion, … here I will leave room for everyone to choose a sign that describes such behavior clearly and strongly enough.
Continuing this story, it is a significant fact that the deputies of the JKP faction maintained their proposals for amendments to the laws, which provided for very unfavorable rules for lotteries and gambling, but as a result the Saeima Budget and Finance (Tax) Committee rejected them because an agreement had been reached. The Party Co – operation Council – namely “New Unity”, “Development / For” – will support the amendments proposed by the JPP and the NA on the increase in excise duty, but – by ensuring that no new restrictions on gambling are adopted. If this is indeed the case, and I have no information that it could have been otherwise, then nothing has changed in Latvian politics. Despite the activities of KNAB, “Delna” and other organizations.
In conclusion, what is even more important. Orderly and efficient health care is first and foremost necessary for the national economy – to increase productivity and the availability of local labor. Importing labor, which has been talked about for a long time, is easy – it does not require complicated coordination of interests and will not meet organized and motivated public retaliation. It is much, much more difficult to achieve really high-quality improvements in health care. I am sorry, but I still see that the Latvian health care system is the same old LSSR / USSR system, which has been patched one patch after another. However, this system has not undergone any real fundamental, structural changes.
When it comes to next year’s budget and the necessary (additional) funding for health care, then, seeing the activities of the ruling coalition parties and their representatives, several deputies of the Saeima submitted proposals that, on the one hand, surpass the Ministry of Finance’s offer, but on the other. gives a steady, balanced and realistic increase in excise duty, which would provide some additional resources.
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