Friday, August 07, 2009

The disaster continues...

I have just returned from being in the US for just over two weeks and, due to sporadic internet access, I have been following developments in Latvia sporadically. The main events/news/rumors concern the continued collapse or hapless reduction of health services, including emergency medical care. The so called First Hospital in Riga (Pirmā Slimnīca) is being reduced to a day clinic and private medical facility, with an apparent sharp reduction in emergency medical services. So don't fall ill or have an accident in downtown Riga, which the hospital used to serve. Some 570 medical and non-medical staff are being laid off, effective almost immediately. There are now stories circulating of Latvian physicians applying for seasonal harvest work in Great Britain (through a company in the news because of dubious recruitment practices).
A couple of years ago, I was informed of a Scandinavian-based project to set up a commercial, state of the art hospital in Riga (or buy one of the existing ones) to provide offshore care to foreigners as well as paid and pro bono care for locals. This seems to have come to naught, as a foreign acquisition could be one way to "save" the First Hospital or Hospital No. 1 (a better translation?). One wonders why the government isn't putting up most of Latvia's hospitals, especially the better equipped ones, for sale rather than turning them into skeleton-staffed clinics? Is the government ineptly covering up that it is, in effect, privatizing health care? So why not do it openly and say -- we are selling our "superfluous" hospitals in an international tender. concession or whatever. In other words, allow international health care corporations to bid for these hospitals with certain conditions for providing low cost care to all citizens (or setting up private insurance schemes) rather than closing or downgrading the places as day clinics and letting (some) heart surgeons pick vegetables in Ireland?
Some of the wildest rumors claim that the hospital will be torn down to make room for a casino, a story that could have been fueled by Riga mayor Nils Ušakovs reported statement that he would like to see "a little Las Vegas" in the Latvian capital (gambling and entertainment resorts for tourists, mainly from Russia where the casino business has been shut down or exiled to the edge of the Siberian tundra).
Meanwhile, there are reports that under the still-confidential new agreement with the International Monetary Fund (IMF), Latvia may be raising its value-added tax (VAT) again to 23 %. There are very optimistic predictions that additional tax revenues from this and possibly a progressive income tax should reduce the need for budget cuts in the 2010 budget to LVL 260 million from the previous assumption that LVL 500 million would have to be cut. OK, there is a report that tax revenues in recent weeks have been trailing planned amounts by only 1 %. But I firmly believe that further VAT hikes will not increase revenues and shift transactions in certain items to the gray market. Tax evasion is a normal and, I think, morally justifiable form of resistance to an inept government that has broken the promise of rendering basic services for the taxes it extracts from the population. The government, by suddenly and seemingly irrationally (state of the art hospitals closed or downgraded, pensions cut--although Sweden has done that, too-- other services attacked with a percentage-guided axe swung in the dark) reducing the return on citizen's taxes will inevitable decrease the tax base through salary cuts, unemployment, and tax evasion. The sums to be cut from future budgets will increase, rather than decrease as government revenues spiral downward, spurred by the government's own policies.

4 comments:

Maris said...

The main problem is that government cutting the service part of budget not administrative. This is not optimization. This is just reducing. If anyone reduces service price have to reducing accordingly. However they rising taxes. I and my family will try to avoid taxes in every case when it can be done with reasonable risc.

Mr.Key said...

When it is much worse here, I'll continue to read articles about that bad situation here.

Anonymous said...

Sadly, things in Magyarorszag are pretty bad, too, not only in terms of the economic situation but especially the political.

rusantro said...

But what you thiking about this news?
http://www.delfi.lv/news/national/politics/article.php?id=26124213