Challenge blog post: Benefits of the real-time economy
A few weeks ago, I posted a blog challenge to some of my colleagues. Specifically, I wanted to learn the opinions of other network members on the major benefits of the real-time economy (RTE).
I challenged two colleagues:
Taavi Kotka from the Ministry of Economic Affairs and Communications for Estonia
Jukka Viitasaari from the Federation of Finnish Technology Industries
Benefits of the real-time economy
For those who are new to the subject, the real-time economy refers to the undelayed flow from system to system of orders, order confirmations, invoices and payments. This facilitates the move towards electronic archiving, electronic book-keeping, automated accounting and real-time tax reporting. The benefits of RTE to society are huge. According to Sitra, the national income register will save at least 100 million euros per year.
Jukka Viitasaari writes that bureaucracy is one of the biggest barriers to entrepreneurship. "One of today's greatest problems is that business is constantly harbouring a growing administrative burden. Setting up a business is relatively easy, but the difficulties begin when the company has begun to operate: a variety of regulatory reports are produced each year, even if it is a small micro-enterprise. Bureaucracy and regulation threaten to suffocate the company at an early stage", he says.
Taavi Kotka says that the they managed to automate VAT-tax control in Estonia. This was achieved by "instead of giving overall numbers, companies sent all B2B transactions over 1000 EUR to the Estonian Tax & Custom Authority." And the result? "we actually managed to get more than 10% growth in the VAT income".
In addition to increasing VAT income, this measure also created more transparency in the Estonian economy. "There is now transparency in all Estonians transactions. Transparency helps computers see if something is wrong with VATs with much better scrutiny than humans. This automation also frees entrepreneurs to focus on other things than for example filing VAT forms to the tax office". This was actually one of the goals of the project, to help entrepreneurs focus on their businesses rather than VAT-related paper shuffling.
Jukka Viitasaari also recommends Finland take the same sort of approach as Estonia has. He suggests that "we could sell our know-how and experiences to other countries." And since financial management will not require the same amount of labour and resources, productivity would increase, he adds.
What actions should we take?
Jukka Viitasaari suggests that we pursue pilot projects, such as those conducted by Estonia. Furthermore, he sees a future in which Finland is the center of global data traffic with a new knowledge-based ecosystem hub. Jukka Viitasaari also calls for agility, which will be much needed in the transition towards RTE.
Taavi Kotka advises Finland not to be afraid of mistakes. "Innovation comes through pain", he adds. An additional benefit of the system is that "we now have a better understanding of what is happening in the economy in Estonia...It is a change of thinking, culture, and also of human behavior", he concludes. I agree!