What Kind of VID Chief?

14 November, 2016 Daunis Auers

Marek Helm, the head of Estonia’s VID (the Estonian Tax and Customs Board), is probably the most popular Estonian in Latvia at the moment. He was the star speaker at the annual Certus Forum in Malpils on 23 September, persuasively explaining why Estonia is able to collect more tax income per head than Latvia despite lower nominal tax rates and just a quarter of the staff of VID.

Indeed, after his well-received presentation in Malpils there was much joking that Helm should apply for the job of the head of Latvian VID. This is not such a bizarre idea. The UK’s current Central Bank Governor, Mark Carney, was head-hunted from Canada. Closer to home, in 2008 Uldis Cerps, at that time the head of FKTK, was recruited by the Swedish government to head the Banking Supervision unit at the Swedish Financial Services Authority. However, prime minister Maris Kucinskis put an end to this discussion, stating that he had promised Taavi Roivas, the Estonian prime minister, that he would not pinch his tax chief!

Helm’s popularity is down to an upbeat, positive and forward-looking attitude rarely seen among his civil service contemporaries in Latvia. Helm talks about cooperating with businessmen to grow the Estonian economy, generate jobs and create an environment where Estonian businessmen volunteer to pay their taxes rather than be coerced to do so. He also has an impressive command of the analytics that his institution uses to track businesses and tax payments in Estonia.

A clear marker of Helm’s successful leadership of Estonia’s VID is that he has made it a place where people want to work. Leading law firms in Estonia talk about how difficult it is to recruit senior staff from the Estonian Tax and Customs Board – and not just because they receive higher salaries than their contemporaries in Latvia, but also because they actually enjoy the challenges of working there.

Finance Minister Dana Reizniece-Ozola has pointed out that Latvia’s VID actually has the same resources and technology that the Estonian VID enjoys. This is probably the case. However, VID lacks the appealing figurehead that can effectively communicate this to the Latvian public and entrepreneurs.

Lessons for Latvia?

As the government continues to search for a new VID chief, there are, perhaps, two lessons that we can learn from the Estonian experience.

First, while relevant professional experience is important, personality is critical. A charismatic individual can transform the culture of an institution and change the way that employees relate to their institution and, in the case of a VID, alter public perceptions of an institution.

Second, any change in culture must be effectively communicated. Latvia’s VID chief needs to be a prominent public figure, regularly meeting employer groups, trade unions, undertaking media interviews and being the (likeable) public face of the institution. In contrast, a dour, unhappy demeanor is hardly likely to inspire employees or push businesses and the public towards entrusting VID with a share of their hard-earned income.

Where to find a chief?

Alas, Marek Helm is unavailable. In any case, broadening the search beyond Latvia’s borders would be politically controversial, not least because it would send the signal that there are no suitable Latvian candidates for the post. This is certainly not the case. The Latvian business world has many suitable, charismatic individuals that could revitalize VID. Indeed, the Estonian VID was modernized by Helm’s predecessor, who was recruited from the private sector.

Fresh eyes and a new approach may be needed to shake up what, on the outside at least, appears to be a rather moribund institution. However, will any suitable candidates from the private sector be ready to take a big pay cut in order to take on the challenge of leading VID?