Hoist by Their Own Petard

There is one aspect of the suffering of holiday resort owners that few people have dwelt upon. It is an aspect that makes their suffering all the more acute, because of all things, the government wanted to help them out, and be generous in calculating compensation for their lost income because of the war.

The government suggested that the owners of zimmers - holiday log cabins and the like, would be compensated based on their income in the summer of 2005. The resort owners were to get almost complete compensation for lost income, a truly bighearted intention.

The formula is a disaster for zimmer owners who had failed to faithfully report their full income to the tax authorities in 2005.

It would seem that tax dodging is not at all rare up there in the northern holiday industry, and the resort owners will unhappily have to claim compensation based on what little income they did report. 

This ironic reality was not reflected in the negotiations over compensation. At some stage in the discussions, some tourism representatives thought to base the compensation formula on refund of costs (including wages), not lost income, probably because of this very issue. But the idea was shot out of the water, mainly because the formula of compensation for lost income is more just. If, of course, one has reported one's true income.

Compensation for lost income is the better alternative for most of the businesses  the north, retail and services, that sort of thing. Clearly, a formula based on costs refunding (plus a little something to compensate for lost income) wouldn't work for businesses that depend on influx of income. If one simply pays the wages of workers who fled and stayed gone as missiles rained on the plant, then one is not helping a grocery shop that stays open but is bereft of customers, because they all stampeded south. Even assuming the grocery let go its shelf-stocker to save costs, it has fixed costs such as rent, power and water that it can't scale back.

The formula of compensating companies for wages of workers was reached in negotiations with manufacturers, and unsurprisingly, serves mainly them. For them, wages are a heavy burden and any help the state can give them there, counts. But for people who own kiosks or restaurants or groceries, the problem is lost income, not the costs they save on hundreds of workers idling in bomb shelters.

The current compensation offer is biased in favor of big industry, at the expense of services and commerce. There are other biases, too. Traders don't get compensation for lost income, but zimmer owners do (subject to their not having dodged tax on income by failing to report it). Restaurant owners don't get compensation for lost income, but kiosk owners do, if they have less than four workers. Lawyers and accountants can get full compensation for missing work, though they can do much of it using laptops from the home. Carpenters who can't get to the shop and their tools, and lose all their orders, get the same compensation, no more.