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Tuesday 13.11.2018 | Name days: Jevgēņija, Jevgēņijs, Eižens

Acting SRS manager: the next head of service should be someone «worth following»

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Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUCan the State Revenue Service be trusted? Who benefits from SRS remaining with no head? Do people see any point in paying taxes, and why is it necessary to take care of SRS employees? BNN asked acting SRS director Dace Pelēka.

Why is it so hard to find a director general for SRS?

Latvia’s State Revenue Service was founded in 1993. For 25 years the institution has been monitoring taxes and taxpayers. According to Dace Pelēkā, Latvia’s SRS is a multi-functional institution. However, the seat of the head of SRS has remained vacant ever since the unexpected passing of the last SRS director general Ilze Cīrule in March.

Dace Pelēkā admits the last director of SRS Ilze Cīrule, who had entered the service with new ideas, had provided employees something of a shock therapy. Nevertheless, in certain matter she asked questions no one else had asked before her.

«After years of working in state administration, it became necessary for us to look at certain matters from a completely different viewpoint. Now that SRS has no director, we continue what was started during Ilze Cīrule’s term, because the tasks entrusted to us are challenging and require a lot of time.» She adds that SRS has not stopped for a moment in its work and development in the past half-year.

When asked if there are people who benefit from the service remaining without a head, Pelēkā said no. «Finance Ministry Dana Reizniece-Ozola has mentioned that it would be best not to organize the selection process before elections. I agree, because it is clear that during the pre-election period some candidates may unwillingly become part of some political party’s campaign.»

Dace Pelēkā does say: «There is no reason to doubt the necessity of a leader for an institution like SRS. The role of a leader in motivating workers is incredibly important. Workers want to see a person worth following as their leader.»

She adds that the search for the next director general is influenced by public attention. «Candidates have to be prepared to expose themselves and their relatives to increase media attention.» Whether wages are attractive enough to attract people from the business environment, Pelēkā said she cannot comment on this.

How does SRS deal with dishonest workers?

Dace Pelēkā stressed that declarations of SRS employees are inspected very carefully. Their review is top priority. «Our objective is identifying signals pointing towards anything suspicious in declarations. We have a special office that studies potential suspicious declarations. Unfortunately, there have been certain cases when our employees did not act honestly. In such cases we made decisions to dismiss them from their posts. We have informed Corruption Prevention and Combating Bureau of such cases,» Pelēkā admits.

As for media reports of cases in which SRS workers were described as half-millionaires, because their declarations detailed considerable amounts, Pelēkā comments: «Even SRS employees can make mistakes in their declarations. Lately statements posted in social media detailed many half-truths. We tried rebuking them, but no one wanted to listen to us. A person cannot become a millionaire if an additional zero is found in his declaration. A careful review of workers’ account, documents for different transactions usually reveals simple clerical mistakes.»

Shouldn’t SRS work in a simpler manner?

«It is about how simple or complex tax and accounting laws are. The more complex laws and requirements from the state are the more resources SRS has to allocate – first requirements have to be interpreted and then documents have to be written accordingly.»

The acting SRS director said one way to help optimize the service’s work is reviewing processes – finding tasks that can be delegated to information systems to free up workers’ time. One other aspect worth discussion – the service provides finance and economy ministries with proposals. «Making accounting reports simpler would help SRS save up resources.»

Pelēkā mentioned an example when Estonia’s institutions managed to save up resources: «Service providers send information to the tax administration, and SRS is thereby aware people receive services. With that, residents are not involved in the repayment process.»

She also proposes a way to reduce bureaucracy burden for small businesses, farmer unions, and people performing economic activities. «What we have always kept in focus – relieving small businesses of accounting requirements and different tax declaration submission requirements and transitioning to standing payments – something similar to patent fees, where small businesses pay a specific amount and work peacefully. After confirming the state has received money from businesses, SRS would leave them alone. I would like to say, however, that Latvian businesses pay taxes honestly.»

«Compared to other countries’ tax administrations, Latvia’s SRS has countless functions,» says Pelēkā. «We are often compared to Estonia’s tax administration, which has half as many employees. What most people ignore, however, is the number of internal structures. SRS has a personnel management office, its own IT department, as well as an accounting office. In Estonia, on the other hand, those functions are outsourced. Our neighbouring country also has fewer customs officials, because Estonia has a shorter border line than Latvia’s,» explains Pelēkā.

«Compared to our Lithuanian colleagues, there are some functions they do not perform.» She adds that Latvia’s SRS also supervises public welfare organizations. Other tax administrations do not do this. Pelēkā adds that SRS in Latvia has a special office – Office for the Prevention of Money Laundering.

In his interview to Radio SWH in June, Aldis Gobzems from KPV LV mentioned names of several SRS employees who supported illegalities of the murdered insolvency administrator Mārtiņš Bunkus. Among those people were Artis Naglis, Aleta Levinska, Rasma Ceple, Juris Petrovs, Signe Belova and Linda Aizstrauta.

He said that SRS had supported not only unreasonable bonuses in the insolvency process of SIA Rego Trade, but also permitted officials to not submit annual accounts. This was likely done to make it impossible to trade creditors’ activities.

Pelēkā comments on Gobzems’ statements the following way: «We inspected the company mentioned by Gobzems in great detail. We noticed the desire to serve selfish interests. SRS, as representative of creditors, opposed this.»

She adds: «SRS performed inspections in relation to cases mentioned by Gobzems. Internal Security Office has also investigated the people he mentioned. We found not illegalities».

Is it possible to make SRS business-friendly?

Although SRS is not exactly the most popular institution among residents, the service has managed to improve its rating in recent years, Pelēkā says. In 2016 only 33% of residents trusted SRS, whereas this index reached 60% in 2017.

The acting director general says one of the factors that determine if SRS works well or poorly is tax revenue in the state budget – specifically completion of the tax plan. This means SRS is able to complete its direct function – tax administration.

Total state budget revenue in the first half-year of 2018 was EUR 4.65 billion, which allowed for the revenue plan’s completion by 101.4%. Compared to the same period of 2017, revenue has increased by EUR 0.47 billion or 11.1%, according to information compiled by SRS.

Pelēkā says consultations form the backbone of tax administration activities. «Here it is worth mentioning trust – are answers provided by tax consultants compliant with the law? Are they equal in all possible cases?»

«In the end, we have to consider the greatest trust from residents and businessmen – the trust in their country. Do people see the benefit of paying taxes – were they spent appropriately by the state?» said Pelēkā.

Once we have taken care of our own people, they won’t be shy to admit they work for SRS.

«We have always said people pay taxes voluntarily. SRS does not administer – businesses pay taxes on their own. But people only seem to notice SRS’ repressive function,» Pelēkā explains.

When asked how the service should go about improving its work, she mentioned there have been many discussions regarding digitization of processes. «What we teach our employees is not taking over old processes and transitioning them from paper to the digital environment, rather looking if a digital process can allow for doing things differently.»

The acting director mentioned that tax administration looks towards different automation solutions for customer services. Some proposals have been voiced in favour of using so-called self-service portals for certain customer activities. Others, Pelēkā said, opposed this proposal, saying that it would make them obsolete. «We told our employees they would not become obsolete, because someone has to teach robots those functions. There has to be someone who would answer questions robots cannot. There are duties that require specific skills. We told employees that they would grow, learn new skills and reach new career heights.»

«You can’t organize a meeting today, discuss everything and chill for six months because people will understand nothing is expected of them. What I have experienced personally is that if 25 people participate in a meeting, it is likely that only five of them will have heard and understood the information provided to them in the end. If we manage to isolate those five, they might become carriers of this idea and pass it on to their subordinates.»

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