Developing business culture

The first years of independence in Estonia were not only marked by an increase in the cost of living, inflation and confusion brought along by the reorganisation of state structures, but also by a decline in the business culture. For people who began their business activities during the first half of the 1990s, it was practically impossible to avoid contacts with criminal groups – the so-called local mafia, consisting mostly of immigrants from the former Soviet Union.

Such groups imposed taxes (mainly on traders and service enterprises), calling the activity “provision of cover”, i.e. protection from competing criminals. There have not been many indications of “mafia” activities in the legal trade during the second half of the 1990s. Such a tendency can be attributed to stronger security companies offering genuine and modern security services and also to the fact that such groups dissolved as a result of mutual quarrels and police activity. Claims have been made that criminal control over trade still exists, for example in the central marketplace of Tallinn, the privatisation of which has been associated with corrupt officials and assassinations.

However, organised car theft and pimping still exist and illegal trade in drugs continues to develop. The market share of illegal alcohol (i.e. alcohol sold without paying the excise duty) can be measured in tens of percents even in the new century and the sales of illegal fuels are at equivalent levels. Cigarettes are the most common type of smuggled goods. Payment of wages without paying taxes is a wide-spread offence currently being tackled by the Tax Board.

The state has tightened customs supervision and recently the Anti-Tax Fraud Division was established at the Tax Board. The Competition Board, the Consumer Protection Board, the Public Procurement Office, the Energy Market Inspectorate, the Health Protection Board and other state authorities also ensure fair trade and protect consumers’ rights. The government has tried to improve the work of these authorities by, among other measures, introducing performance-based salaries, which tie the salaries of officials to the results of their work.

On the basis of current trends, it can be said, however, that during recent decades Estonia has demonstrated its determination to move away from the closed and inherently asiatic Soviet system and return to the developed capitalism of Western Europe and the Nordic countries.

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