The newspaper has a long and illustrious history.  Founded in 1896 by Lord Northcliffe, today it actually has Britain’s second largest circulation, after The Sun.  Although it was the first British newspaper to top a million copies, it wasn’t always like that.  I remember when it was a “broadsheet” and then, in 1971, revamped itself as a “tabloid” – smaller and more compact.

It was designed from the outset to be a mass circulation paper and was aimed at the new and growing class of “educated” which emerged from the introduction of compulsory schooling as a result of the Education Act of 1870.   Cheap and packed with competitions and gimmicks to attract readers.  Although it was always my father’s paper, it was known as “woman’s paper” and carried many features designed to appeal to women readers.

As a teenager I would pick up the paper and scan the contents, but I wasn’t that interested in it … it was a right wing “conservative” paper and although the stories and commentary always appeared to be logical and reasonable, as in most tabloids they were also usually short, highly selective and presented in a provocative and sensational manner.

Like most of our American cousins, (at least, according to some surveys), the first page I would turn to was the one with the cartoons, (“comics” in American).  The paper carried Peanuts, (by Charles M. Shultz featuring Charlie Brown, his pet beagle – Snoopy – and a host of other characters); Fred Basset, (featuring the wry sardonic comments of a Basset hound on life as a suburban pet); Flook (drawn by Wally Fawkes – aka Trog – short for Trgladyte – but written by such comic masters as Barry Took, Humphrey Littleton, and also George Melly and Barry Norman.  It ran from 1949 to 1984 and featured a young boy, Rufus, and an imaginary furry creature after whom the cartoon was named, who inhabited a satirical fantasy world populated by a range of larger than life characters who bore a striking resemblance to politicians and celebrities of the day – as well as the lovable villain, Bodger, and his sister Lucretia.)  There was also the infuriating “Love is …”cartoon – well, I found it infuriating, anyway.

It’s a long time since I left home and I have seen the paper only infrequently ever since.  Although I have seen their website – usually when they’ve carried a story about Kyrgyzstan such as the character sketches of the Jockey come tour guide Richard Dunwoody or the equine adventurer, broadcaster and businesswoman, Alexandra Tolstoy.  I was a bit surprised this week, therefore, when a link on newsletter took me to their website.

.

The story this time wasn’t about Kyrgyzstan, or horses … but about Rome.  More specifically, it was about a new “Tourist Tax” that has just been introduced by the authorities in the Italian capital, ostensibly in order to help protect the city’s many monuments.

Tourists will have pay two Euro per person, per night, (for the first ten nights of their stay, … “how many tourists stay in Rome for more than ten nights?”, I wonder), if they stay in hotels classified as three-star rating or less, and three Euro if they have chosen four or five-star accommodation.  Even campsites fall within the remit of the tax: campers will pay just one Euro, (but only for the first five nights).  On the other hand, youth hostels are exempt from the charge, as are children under ten.

The authorities hope it will raise around eighty million Euro a year from the approximately thirty million visitors the city attracts each year – which suggests an average stay of just two or three nights in the city, perhaps over a weekend.

.

Now tourist taxes are fairly common around the world – but they can also be a bane.

Amongst their attractions to the authorities are that they are, theoretically, easy to administer.  It’s like a poll tax – there’s a body, so you pay.   That’s not, however, always the case.

Rome, for example, has almost 4000 establishments offering accommodation.  Hotels and established bed and breakfasts, (or what would be homestays and yurt inns here in Kyrgyzstan), technically have to be registered for tax and inspected by the sanitary, fire prevention and other bodies, however, a large number of private houses also take in guests on Lake Issyk Kul and not all of them are as scrupulous about registering.  In theory that should be easy to control, but I fear that the result would simply be that a large number might well evade their liability.

The Romans have also chosen to introduce a flat rate tax, banded so that rates can take into account the type of accommodation.   This may be a good idea but, although simpler to administer, flat rate taxes do not really offer much differentiation even if they are banded.  A room in a five star hotel may cost a couple of hundred dollars or over a thousand …  and it seems to me that a percentage base might be preferable.

For the record: here in Kyrgyzstan, when we opened the Silk Road Lodge, there used to be a hotel tax … it was also a flat rate, assessed monthly – 3 som … per guest … not per guest per night.  It didn’t matter if you were staying in a “B&B” or a five star hotel; it was the same, 3 som.  (One hotel – I won’t name names -  used to charge an additional USD10 for the first night claiming that it was a tax issue … at that time the tax, 3 som, was probably worth 10 cents!).  It seemed to me at the time as a total waste of time – and designed simply to give the tax authorities something to check … so that they could find an infringement and issue a fine, (or extract a bribe).

Then the authorities decided to change the basis of the tax to a percentage of the cost of the accommodation, which immediately brought in a considerable increase in tax revenues for the authorities.  Our bill for this tax, for example, rose by fifty-fold and as we had included the tax in the price of the room, and didn’t charge the clients a separate sum, the burden fell entirely on us until the next annual price review.

One of the issues about the hotel tax that we constantly faced was what it actually covered … there cost of the room – OK, that’s obvious – but there was also a provision that it covered the cost of the booking.  So the cost of the booking fee charged by an agent was covered.  That’s the same situation which many local authorities in the US are trying to grapple with.  How do you collect these local taxes from companies who may be located out of your jurisdiction, even in another country.  Then there was the question of breakfasts.  Food and Beverage is not part of the accommodation – unless, so it was argued, it is included in the room price.  So, a breakfast included as part of the room rate was taxed, but one which wasn’t, wasn’t taxed.

When they were revising the tax code there were a number of suggestions for changes to the tax.  For example, one was to change the basis of the tax from the cost of the accommodation to the cost of the hotel services … all hotel services: meals, telephone charges, internet charges, fees for use of the sauna, “in-house” laundry or fees for any other additional services which a guest may choose to take advantage of … in other words, it would a percentage of the overall bill.  In one way that suggestion came to nothing because the hotel tax was abolished along with a number of other small, “nuisance” taxes … but as these were replaced by a general sales tax, in effect, it was adopted.

The authorities in Rome seem to have made the situation worse, according to the Daily Mail report, by requiring that the tax is paid on checkout, “in cash”.   Modern day travelers, used to paying for everything with a credit card, will need to remember to hold back a little paper money to take care of this additional “extra”.  The compulsory introduction of “cash” might also be an accounting problem – as it provides an open invitation for corruption and “cheating the system”.

When there was a Hotel tax in Kyrgyzstan, many hotels didn’t include it in the price of the room, (although we did at our hotels), but they added it onto the bill at the end of the stay.  This caused all sorts of problems with quests who objected saying that the quoted price was ‘x’, so why were they being asked to pay more.  It would be far better for the hotelier to simply include it as an element into the cost of the room.

What’s more, as the Romans have decided to limit the tax according to the number of nights, (although few people will stay long enough to take advantage of the “tax free nights”), it may make complications when it comes to calculating the bill as two different rates might well apply.

That’s not to mention the additional burden on the hotel’s accountants and bookkeeping system, and the associated cost involved to the business.

So, all in all, a hotel tax is not as simple as it seems.

.

Another advantage, or attraction, of a hotel tax is that they the brunt is borne not by the local population but by the visitors.  In order to support visitors there needs to be additional infrastructure and it seems that they should contribute to it, and the full burden not borne by the local population.  In theory, the old hotel tax in Kyrgyzstan, being a local tax with the revenues going to the local authority instead of the general exchequer or some targeted fund, (for marketing the country and attracting more tourists, for example), did just this, although it is doubtful how effective it really was.

Then again, the revenues raised from tourist taxes, or hotel taxes, can be targeted towards a particular purpose, as in this case.  There was once a suggestion to introduce a Tourist Tax, (or Hotel Tax), here in Kyrgyzstan which would be used to pay for marketing the country abroad in order to attract more tourists.  The suggestion was never implemented, however, mainly because at that time their already was a hotel tax, a local tax with the income going to the already impoverished local authority.

.

Now, it is true that the additional expense incurred by the tax won’t necessarily add a lot to the overall cost of the holiday, (the report compares it to the cost of a cappuccino), and, of course, the actual rate can be set at differential levels depending on the type and/or cost of the accommodation.  However, “what a person is prepared to pay” has always struck me as a dangerous argument when considering setting a price and, unfortunately that seems to be an argument that I come across quite frequently – whether it be from a taxi driver or a hotelier.  I also think it is close to immoral.  It seems to me that it shouldn’t be a question of “how much can we get away with?”, but should be “how much is it actually necessary to raise and how can we achieve this?”

Of course, what people are prepared to pay is an issue that needs to be considered.  After all, such additional sums, (no matter how small), do increase the overall cost and sometimes, (especially given these figures of one, two or three Euro – or 60, 120 or 180 som), they can be quite significant when compared to the prices charged by some establishments.  As one hotelier in the report put it, “Tourism is our main income and prices in Rome are already high enough, so although it appears only a small increase, for a family on a break in the city it will add more to the final bill and be noticed.”

What is more, the additional expense, no matter how small, can be the equivalent of “the final straw” which encourages the tourist to forget or overlook a particular destination as too expensive and propel them towards one which appears cheaper.

In the case of Rome, of course, there are a number of attractions which will draw tourists.  As another person quoted in the report put it, “I don’t think it will stop people coming to Rome.”  Rome is Rome – there are lots of reasons for choosing to visit Rome, what with its numerous historical, cultural and other associations.  It was the seat of the Roman Empire.  It is the home of the Catholic Church.  It is in Europe’s “backyard” with easy access for the millions who live there.  Visitors may not notice a few extra Euro on the cost of the trip in the course of time … but that’s not true everywhere.

Some destinations are very price sensitive.  We are constantly being told, for example, that the cost of a holiday in Issyk Kul is too expensive for the typical guest from Kazakhstan or Siberian Russia – especially when compared to the cost, facilities and level of services available in places like Turkey and Thailand.

.

So, all in all, I am glad that our hotel is in Bishkek and not in Rome.

But I do have to thank the Burghers of Rome for one thing … their decision has brought back a number of happy memories mulling over, for example, a strange unidentifiable, shape shifting, satirical, imaginary, furry creature from my youth.

What a Flook!

.

PS - I looked for a copyright free image of Flook so you could see what I was getting excited about … but can’t find one, so, I’m sorry about this, you’ll have to google “Flook cartoon” for yourselves … or you could just click here, … this gives a lot of other, unrelated, images but quite a few good ones of the whimsical character – including a link to a post which includes an explanation of the origins of Flook.

Actually, there were two of them.  It was obvious that they were from the tax authority because one of them was in uniform.  Yes, tax inspectors here in Kyrgyzstan have a uniform.  He also showed us his identity card, and, to be honest, we might have made a mistake because we didn’t make a note of his name and number.  Normally, it wouldn’t be too important, because he should give us a copy of the order authorizing the inspection and he would identified in that – so, we would simply have to check details on the identity card against those in the document.  The trouble was, he didn’t have a document.

He said that they were working “po spiskiy” – they had a list of organizations and they were checking just one thing.  From us, they wanted to see the details our rental agreement for the office … was the landlord paying tax on the income?

He was a bit surprised when we said “No, we won’t give you that information.”

In an attempt to try and persuade us to back down, he said that he was checking us … he just needed information from us so that they could check on the landlord.

As it happens, that phrase always makes me suspicious … the suspicion is probably unfounded, but it always seems odd that it used to try and persuade me to do something As it happens, in this particular case, I know that the income is declared and that the tax due is, indeed, paid.  However, I am not convinced that, in the event that they did discover some sort of infringement there would be no comeback against us.

I pointed out that what he was asking was basically confidential information … he was entitled to receive that information, but only if he produced an order.  If I gave the information to anyone who walked in through the door, then my clients and business partners might have grounds for complaint.  Give me the appropriate order and I will give him the information … no problem.  Indeed, I would be obliged to give it to him.

It’s not the first time we have faced this problem: someone claiming to be an inspector asking for information, which they might well be entitled to receive, but without the necessary authorization.   We’ve turned them all away.

He took the point and promised to come back with an order … that was over a week ago, and he still hasn’t come back … at least, not so far.

I turned my attention to the second person who was standing by taking everything in with a wry smile on his face … he was a large, fit looking individual.  He was not in uniform, and when I asked him who he was, he simply said: “I’m with him”.  That was obvious, so I asked if he also worked for the tax authorities and when he said, “Yes”, I asked him for his identification?  He didn’t have it … it was in the car.  So I told him to go and fetch it.  He looked astounded.  I explained that if he was a tax inspector, here on official business, then he was obliged to show me his identification.  If he wasn’t an inspector, or wasn’t on official business, then he had no business here.  “You either show me your identification, or you leave.”  He chose to leave.

I turned back to the first inspector and pointed out that last March we had an incident in the office where I had a knife pressed against my throat and my cleaner had a knife pressed against her stomach.  As a result we are much more security conscious than we were a year ago and more so than most people are.

Once again, he took the point.

I ought to point out that it wasn’t an unpleasant encounter.  At all times he was polite and businesslike, if a little curt at the start.  There were no threats, nor any suggestion of anything improper …  and I also ought to point out that if he had presented me with the appropriate authorization, then we would have given him the information he needed.

The idea of Magazine supplements had been pioneered in the States by the New York Times and in 1962 the idea crossed the Atlantic Ocean and the Sunday Times launched the first such magazine, to be quickly followed by other “broadsheets”, (or “quality papers”), such as the Observer and The Sunday Telegraph, and later the idea was taken up most of Fleet Street.  These magazines helped to fill a gap in the market created by the demise of weekly news magazines as a result of the rise in the availability and popularity of Television.  They were able to take advantage of cheaper and much improved colour film and by the end of the decade the “supplements” had established them as part of a way of life.  Sunday morning was for sitting and leisurely  reading the Sunday papers, if not from cover to cover to cover, then at least in far more detail than you would have spent on ordinary weekday.

The supplements helped to transform the traditional newspaper in the face of the challenges presented by Television – and were able to exploit the advantages of print over broadcast media … for example: it can be taken with you and can be read anywhere: in an armchair, lying in bed, on a journey on a train or a plane, it doesn’t require special equipment; the reader is in charge and can take the material at their own pace – it is possible to pause, for example to re-read a passage and think about it, and to even be interrupted then continue from where you left off; it is possible for the author to delve deeper into a topic and easier to provide background and analysis.  Although video reports can be immediate and dramatic, they are not always the most appropriate media for conveying information.

The supplements also helped to change the public perception of journalism.  By the end of the decade they, and the Sunday Times Magazine in particular, had become identified with stylish photography, and willing to spend lavishly in pursuit of stories from the Beatles to the Six Day War.

It was a good marketing ploy on the part of the Sunday Times … as shown by the fact that all their competitors rushed to follow suit.  Even we, as a family, subscribed to the newspaper in order to receive the magazine, (and we were by no means typical readers of such newspapers), and they helped to form and inform me, my opinions and outlook.  Later, at University and when I started work, I took not just one but two weekly newspapers complete with four, five or six sections – and the colour supplement – and when I do go back to Britain for a visit … I buy yet a third each weekend and while away my “lazy” Sunday

I sometimes get to see the occasional edition here in Kyrgyzstan.  Many of our visitors to Kyrgyzstan, (especially those who know how hard it is to get printed materials in English here in Bishkek), are thoughtful and bring magazines and/or newspapers with them to read on the flight and instead of leaving them on the plane, they bring them to us in the hotel.  To be honest, I although I can’t honestly say that I devour them with the same devotion and commitment as I did when I was younger, but I still take great care to go through them carefully, before leaving them lying around for the next person to pick them up.

I used to out articles to keep, a habit which I still have although I don’t have the articles as I cull them from time to time and all the old ones which were so fascinating at the time I have long since disposed of.  I remember one article was about the Vietnam War and although I can only recall the general impression, I do remember vividly the headline: “How America’s Best Started Its Worst War”.

That headline made an impression on me … and was brought to the forefront of my mind when the Soviet Union invaded Afghanistan in the 1970′s … and again when the American and British led coalition invaded Iraq …  but that’s another story.  I won’t go into how “the road to hell is paved with good intentions”.

“How America’s Best Generals Started Its Worst War” is probably a good example of Murphy’s Law at work … “If anything can go wrong, it will!”.

No matter how clever you are, no matter how thoroughly you plan, it is important to remember that you are NOT master of your own fate and something will occur to frustrate your objective, and events could turn drastically wrong so that you end up in an even worse situation than when you started.

This is such a universally accepted adage that it crops up in different variations all over the world and in different walks of life.  One commonly quoted example is: “The Toast always falls butter side down” – and, apparently, there has been some scientific research which shows that is really true.  In Russian the equivalent is “Zakon Polostiy”, or Sod’s Law!  There is even a website devoted to Murphy’s law in its many different guises,  with its extensions and corollaries, and outlining a brief history: www.murphys-laws.com.

I suppose the classic literary expression of Murphy’s law was by the Scottish Poet, Robert Burns, in his poem, “To a Mouse” when he penned the lines:

The best laid schemes o’ mice an’ men
Gang aft a-gley.

Basically: Things rarely ever go according to plan.

That sound’s like cynicism, but it seems more than that to me – it’s plain common sense.  The Cynic will accept the veracity of Murphy’s Law and assume that things WILL always go wrong … but in reality life is not that simple, or predictable … the classic expression of Murphy’s Law is simplistic.  Not everything goes wrong … but a sensible person recognizes that things “rarely ever go according to plan”, and as a result is in a better position to deal with problems and misfortunes when they do arise.

I wish this concept of uncertainty and the fallibility of plans had seeped through to the Soviet Union.  One definition of a plan is: a set of intended actions used to achieve an objective or goal.  Unfortunately, here, the word “plan” can also have another, more specific, meaning, referring not to intended “actions”, but to “results”.

This derives from the Soviet period – when everything was done according to a plan … In the Soviet Union, everything ran according to a plan.  There were thirteen Five Year Plan’s, and even “Seven Year” and “Twelve Year”, drawn up by GosPlan, the Government Planning Department, for the economic development of the country.  Factories were given a plan outlining their own quota of production to meet.  Fulfilling the plan became the watchword of Soviet bureaucracy.  The plan was sacrosanct … it had to be met … and it usually was met – even exceeded – by hook or by crook.

There is a nice cameo about the “plan” in Chinghiz Aitmatov’s novel, “The Place of the Skull”.  The Five Year Plan calls for the collective farms on the Kazakh steppes to provide a certain quota of meat production … but as the five years draw to a close the authorities realize that they are not going to make the targets, so they look around for a way out of their predicament.  They realize that roaming the steppes are some herds of wild animals and so decide to send out hunters in helicopters to cull the herds … and thus provide the meat needed to fill the shortfall.

Recently there was a case of a plan NOT being met … The largest reservoir in the country is behind the Toktogul Dam which controls the flow of the Naryn River and generates much of the country’s electricity output.  Unfortunately, in recent years the level of water in the reservoir has been falling, and this was made worse by the very cold winter in 2007, which led to a over the last winter (2008/9) there wasn’t enough water in order to maintain production art the sort of levels the country needed.  It was clear there was a serious problem fairly early on because there was an official announcement that the “plan” for replenishing the water levels in the reservoir hadn’t been fulfilled.  An official announcement that it hadn’t was quite an admission – and shows how serious the situation had become.

The Tax authority is given “plans” of revenues it is expected to raise for the budget.  That seems reasonable – they have to plan their activities and their  expenditure in line with their revenue … that what every businessman has to do.  There is a problem however, in that the plans are not always realistic – and the local “mentality” does not make allowances for the operation of Murphy’s law … For example, we were once called by the tax authority and the conversation went something like this:

• Why aren’t meeting your plan? …
• What plan? …
• We have to raise “x-million” som in hotel tax and your share is …
• Wait a minute, sales tax depends on the level of sales and some months they are up and some months they are down, some months they are better than expected but other months they are worse than expected, (for all sorts of reasons).  The tax due depends on sales – we calculate what has to be paid and pay it … we are not responsible for your “plans” … nor for fulfilling them.

As it happens, the “x-million” was grossly unreasonable – implying far more hotel rooms in Bishkek, and far more income from them, than exist.

Again, there is a new law which decrees that we, as a tour company, have to give the authorities, by November each year, a “plan” of financial results for the coming year, and they have to check it during the course of the year for “correctness”.  Notice it is called a “plan”, not a prognosis or a statement of expected results.

We are going to have a basic problem in fulfilling the requirements of this law: we don’t know how many tours, tourists and income we are going to have in the following year … not by November.  We may have some preliminary orders and a variety of enquiries, but they all represent “potential” rather than “confirmed” or even, (for want of a better term), “planned” figures.  The trouble is that most tours are only confirmed about a month before they are actually due to start … even preliminary orders are subject to cancellation – and a surprisingly large number are cancelled!  On the other hand, a large amount of our business arises during the course of the year … last minute or late enquiries, people “dropping in” to the office – on the “off chance” … that sort of thing.  Of course, like every business, we have to plan ahead … and we can make estimates, based on the experience of previous years but, as the financial services sector tells us: “Past performance is no guarantee of future results”.  I do understand the reasons for the measure – but would feel happier if we were being asked for a prognosis rather than a “plan”, or if there hadn’t been the the emphasis on the authorities checking its “correctness”.

As Oscar Wilde said: “To expect the unexpected shows a thoroughly modern intellect.”

The play “An Inspector Calls” was written by J. B. Priestly in 1954.  The story is set in Brumly, (a fictitious, industrial, town set in the North Midlands of England), in 1912 – just before the First World War.  The Birling family have gathered to celebrate an engagement.  The head of the household, Arthur Birling, is a prosperous businessman and factory owner – who is driven by the motivation to make money and acquire power.  His motto seems to be: “a man has to make his own way in life”.  In many ways he is a typical caricature of a “capitalist”.

Their celebrations are interrupted by the arrival of Inspector Goole – The inspector of the title.  He informs them about the death of a girl (Eva Smith) who apparently committed suicide – swallowing disinfectant and dying on the way to the infirmary.  After lots of questions, it appears that each of the characters, in their own way, was – more or less – responsible for the girl’s tragic death.

After the inspector leaves, however, they discover that he wasn’t a real inspector at all – and no-one has died.  The family are relieved … but then the phone rings: it is the police … a girl has committed suicide and an inspector is on the way to ask some questions.

Here in Kyrgyzstan, the word “inspector” usually summons up images of the Tax Inspector.

Benjamin Franklin is supposed to have said that “there are only two things certain in life: “death and taxes.”  Taxes are certainly important here in the Kyrgyz Republic – inescapable, really, although most people try to avoid paying them if they possibly can, legally, or otherwise.  It is said that a large number of businesses in the country operate in the “Shadow Economy”.

There is nothing wrong in trying to avoid tax – to minimize the amount paid.  The businessman is involved in making a profit and there are major ways of doing that … one is to increase income, and the other is to decrease expenses.  Tax is an expense – and it is legitimate to try and reduce the amount of tax paid … so long as the method employed is legal.  Tax avoidance is not a crime – Tax evasion is.

The difference is sometimes a “moot point” … a fine distinction.  Running two sets of accounts – one which you show to the taxman which doesn’t contain all your sales – is tax evasion, and illegal.  So is declaring that you pay your employees 1000 som, when in fact they receive 2000 – saving income tax and social fund payments.  On the other hand, acting as an agent – selling goods for someone else, and accepting payment on their behalf, so it is not your income … so that only the commission you receive is your income and so declared, even though it is a lot less than the cash which actually passes through your hands … is not.  Nor is employing someone, wherever possible, on a “patent”, (a document which involves a “one off” payment to the tax authorities, which a amounts to a lot less than if they were an employee and had to pay the full amount of income tax and social fund contributions).

Of course, to the government, (local or national), the tax revenues it receives are vital – and enable the authorities to fulfill their obligations as set out in their annual spending plans.  If we want the roads to be in good order; the hospitals, schools and police be available and responsive the borders to be guarded; the fire brigade and sanitary services to operate well and protect lives … and so on, then they have to be paid for.  As far as the authorities are concerned, they need to maximize their tax revenue – their income – in just the same way as the businessman tries to increase his income.

One powerful instrument available to the authorities to enable them to do this is the tax inspection.  In Kyrgyzstan, most businesses are inspected annually.  In fact, it is enshrined in law that the authorities can only conduct a full inspection once a year – unless one specially requested.  Why would one request an inspection?  Perhaps, for example, if a business was going to close, or was being sold, or reorganized in some way.  There are other inspections which take place during the course of the year – but these should be limited to specific issues.  For example: during the inspection of another company, a question has arisen and the inspector wants to verify the details on an invoice, or receipt.

Nobody likes an inspection … Your work is under the spotlight and you have to justify yourself and your actions.  In the case of a tax inspection in Kyrgyzstan, the spotlight can focus on microscopic details … and you never know where the inspector will chose to point it.  There is another factor: here the inspection can lead to the imposition of fines and penalties.   Although the inspector’s role is supposed to be to verify that everything is OK – that the taxpayer has made the correct declarations and paid all the tax which is due, there is another facet in that they all have a plan to “fulfill” – they have to find irregularities and then recover unpaid tax and impose the appropriate penalties.  The result is that the emphasis of their work is not on verifying that everything is in order – but to be to find additional funds for the budget.

I am told that, as in Roman times, many of them have “bought” their position … so there is also a need to recoup the money paid out.  If this is true, it results in a brand of corruption whereby inspectors “find” a technical, or real, infringement of the legislation and then offer to “forget it” or “overlook it” in return for an ex-gratia payment – a bribe (vzyatka in Russian – also known as “blat”).

Why do I keep saying things like “or so I am told”? – because my experience is fairly limited.  As a foreigner, people are reluctant to approach me directly … and so I cannot say for certain, from personal experience, that this is the case.  What I can say is that this is the general impression.

In another play – “The Government Inspector”, by Nikolai Gogol, one of the characters accuses another of “taking more than your due”.  He doesn’t accuse him outright of bribes – simply of demanding too much. Bribery was, apparently, so built into the system that the play is able to exploit the theme, exposing all to ridicule.  In fact, Gogol used the play to ridicule the extensive bureaucracy of the Russian government – with its inherent corruption, with the message: “If your face looks crooked – don’t blame the mirror!”, and, by all accounts, Tsar Nicholas I enjoyed the play immensely, despite the fact that, as he himself is said to have commented, the play ridiculed everyone, most of all, the Tsar himself.

To be fair – I suppose we have ask the question “when is a bribe not a bribe?” – that may sound like sophistry … but put it this way: “when is gift a bribe?”, and it makes a bit more sense.

The Americans have an anti-corruption law which prohibits American companies from paying bribed … but it allows the payment of “facilitatory payments”.  Basically, if a low level bureaucrat can old up some procedure but by giving them a small gift as expression of gratitude for speeding up the process … then this is permitted – whereas paying a high ranking official for granting certain privileges … which may, (or may not), be granted without the “gift” is not.

Clearly, paying someone to “overlook” an infringement of the legislation would not be countenanced – nor should it.

We have been fairly lucky in our dealings with the tax authorities.  I put that down to my accountant being scrupulous in all matters concerning our tax affairs.  She is VERY meticulous in this respect – no easy task given the labyrinthine system of taxes and tax legislation here.  For several years, this resulted in our being awarded “spravkas” – certifying that there had been no infringements at all.

One year, however, the inspector thought she had identified an infringement.  No amount of argument could convince her otherwise.  We said that if she insisted on stating that we had made a mistake in her report then we would appeal.  She “stuck to her guns” and so we appealed.  We won the appeal – from the judgment it appears that there was a specific instruction that upheld our argument … but to this day we have not been able to find a copy.

Then, we received an inspector that seemed determined to find fault – even if there was none.  He made me feel like Arthur Birling in Priestly’s  play.  I was the nasty capitalist – intent only on making money and willing to stop at nothing in the course of doing so.  He was the equivalent of Inspector Goole – here to expose my guilt.

His case was technical and rested on one phrase in the Tax code.  Like the previous inspector – we could present no argument which could persuade him otherwise.  Not the fact that the Tax Code includes procedures which we have meticulously followed …  nor that it limited his remit to just the period since the last inspection.  To be fair to him … IF we considered only the one phrase on which case rested, then he had an argument – but if we considered the Tax Code as a whole, then he didn’t.

He, too, “stuck to his guns” and wrote in his report that we owed nearly two million soms in taxes, (about USD40000).  We appealed and lost the first stage of the process – where the tax authority, itself, considers the appeal.  So, we went to court.

The court decided in our favour.  The tax authority appealed, and once again, we won the argument in court.

To make matters worse, however, we argued that the inspector had infringed the proscribed procedures in several respects:  He should only have considered one year – since the last inspection – but decided to go back, instead, to the beginning of the company’s operation – beyond the six years of tax liability;  He appeared to have “invented” a new procedure which was not proscribed in the legislation; Documents were not properly formulated – the necessary stamp certifying an official signature was missing; The correct procedures were not followed – documents were issued without consultation; Papers presented to the court, which should also have been sent to us – were different to the ones which we actually received by registered post – even though they bore the same reference number, date and signature; There was an attempt to order a re-inspection of the previous year’s tax reports – including the inspector re-inspecting his own work.  And there was more …

I am not sure why this happened … Was the inspector looking for a “gift” in exchange for overlooking the alleged “infringement”?  (If so, he never asked – and we never offered.)  Was he simply trying to fulfill “the plan” – to find infringements and so elicit supplementary payments to the budget?, (and failing to find one, he simply became over zealous and fixated on one phrase of the Tax Code).  Had he really found an inconsistency in the tax legislation which needs to be addressed – and was sticking to a point of principle?  (In which case let the legislators address the issue – but in the meantime, we have fulfilled our obligations under the law as it stands at present.)

Even if I am tempted to think otherwise … let me be generous and assume, for the moment, that it was the latter.

I wish I could say that it was now all over – and could relax once more.  Although we won the court case and have a judgment in our favour, I have to note that, technically, the authorities have three years to consider an appeal to the Supreme Court.  Also, just as in both plays the final curtain down with the expectation of an impending visit by yet another inspector … after nine months of dispute, we are now anticipating our next “annual inspection” which falls due in a very short time.

What will that bring … ?

In fact we had more problems … but worse still, this case wasn’t over yet.  The authorities decided to appeal once more to the Supreme Court, who declined to reach a decision and, instead, they sent the case back to the lower courts.  So we had to go through the whole system once again.  We won the case again in both of the lower courts and finally ended up back in the Supreme Court, but this time before a different set of judges, who grasped the nettle and eventually decided in our favour.

Although I could have done without the protracted stress and worry that the whole process entailed, I did get one positive feeling out of the experience … the legal system did work.  I know that it is easy for me to say that because we eventually the case, and I wonder if I would have felt so positive if we had lost it.  To be fair, however, it seemed to me that the judges were meticulously fair and reasonable and they were very thorough in considering the details of the case.

So, I suppose we have to agree with Shakespeare that: “All’s well that ends well” …  mind you, I could have done the two years of stress and uncertainty!

I used to be a Maths teacher … and so figures don’t frighten me as much as they do many other people … but how people use figures does worry me. There is something about figures that gives them authority … or rather, gives an authority to the person quoting them: “You can’t argue with the figures.”

On the contrary, you can – and you SHOULD!

There is the joke – I presume it IS a joke – about the museum guide showing tourists around and when she came to the skeleton of a dinosaur, she proudly announced that the museum staff had given the creature the nickname “Lucy”, and that Lucy was “two million and eight years old”. Once, when she was showing a school party around, she made her usual speech – and the teacher accompanying the group was astounded by this news, and asked how she knew the age of the skeleton. She replied: “Well, when I first came to work here they told me that the skeleton was 2,000,000 years old. That was eight years ago … so, now she must be 2,000,008.”

It was the Archimedean School Sometimes the reverence in which the authorities are quoted here in the Kyrgyz Republic reminds me of the Archimedean School of ancient Greece which used to consider numbers as ‘divine’. In this modern age – we should know better!

As someone who has had to teach Statistics, I know that they can be very useful as a management tool, as an indicator, but I also know that Statistics raise more questions than they answer. For example: Where did these figures come from? , What do they actually mean?, What are they being used to say?, Do they really say that?, Do they really make sense? … and so on.

And that is just looking at the figures … not who is quoting them, their motivation – what they are trying to prove, … and so on.

There are many different examples of “strange” statistics. To give just two examples:

I remember, when I was young, being told that the average British family had 2.4 children … so, apart from being left with the question “what does .4 of a child look like?”, I was left with the feeling the I didn’t come from an average family – we only had two children, (my brother and I). We may not have been average in all sorts of ways – but I can’t help feeling that in others, we were exactly that. As a teacher, whenever I had to teach averages, I would ask the class how many children came from an “average” family and in response to this question a number of children would raise their hands. When I asked, which part of the body – an arm, a leg, the head, represented the 0.4 of the child in their family there were smiles all round – and I hope they learned the lesson to treat statistics with a certain amount of caution – suspicion, even.

Recently it was reported that according to the Official statistics, Kyrgyzstan bought goods and services worth some USD84 million from the People’s Republic of China – but if you look at the Chinese figures – they sold goods and services worth USD145million. How can we reconcile these figures? Actually, I don’t think it is that surprising – if a large part of the Kyrgyz economy really is in the “shadow” as many people say it is.

The other day I was invited to an interview with a group of foreign experts who were in the Kyrgyz Republic to investigate the Tourist industry. I told them, “Don’t believe the official statistics” – and the Minister for tourism was sitting next to me at the time … actually, I think he would probably agree with me.

We have to ask ourselves many different questions about the statistics. For example: where did they come from?, what is the source of the figures. Let’s consider an example: how many tourists visited the Kyrgyz Republic? … According to the official statistics, in 2002 there were 139,600 tourists; in 2003 – 211,300; and in 2004 – 1,527,500. This seems to show pretty impressive growth … BUT, it should be noted that the sources used for the 2004 figure was different. For the first two years, the figures are taken from the State Statistical Committee and are based on reports made to them by tour companies, hotels end so forth, of the number of clients. The 2004 figures were obtained from the Border Authorities – and reflect the number of foreigners crossing the country’s borders – tourists, businessmen, diplomats … and so on. If you take the figures of the National Statistics Committee for 2004 – then (for the first nine months of the year) there were only 703700 tourists – still an impressive figure … but well short of, (indeed, less than half of …), the 1,411,190 reported by the border authorities for the same period. How do we reconcile THESE differences? (Needless to say – these statistics have recently been the subject of considerable controversy.)

The State Statistical Office receive figures from companies, hotels etc. – but, how many tourists from neighbouring Kazakhstan, Uzbekistan and Russia come independently, without using a tour company, or stay with family and friends … – and how many “Western” tourists as “independent travelers”? The border authorities report the number of people crossing the various borders – but how do we know who is coming as a tourist and who is coming on business. (In Mongolia, for example, officially there are a large number of Chinese tourists every year … but in fact many of them are market traders – who use a tourist visa because it is cheaper and less bureaucratic … such ‘Shopping Tourism’ is quite big business here as well. For British readers – it may be similar to the shopping trips over the Channel – to take advantage of cheaper prices for wine etc. in Calais and Boulogne).

Each month we have to give a report from our hotels to the State Statistical Committee about how many have stayed with us; from which country; how long they stay with us; how much they spent for accommodation; and the purpose of their visit. The first four are quite easy for us to collect … we have to keep a register and accounts, and it is just a bit of extra clerical work … but how do we get the reason for their visit. We actually ask them, there is question on the registration form – but more often than not this question is ignored. In the end, in most cases, we go by their visa – assuming they need one – and rely on the consular official having done his job properly.

Of course, the government are concerned that much of the tourism sector operates in the “shadow economy” – not reporting and not paying tax. There may be some truth in that – but is the problem as big as is claimed. The Prime Minister says he calculates that the tourist business in Issyk Kul is worth about USD100 million a year – but only something like USD32 million is reported. Actually, he says that the budget receives only USD32 million – but the budget (i.e. the money raised through taxes) receives far less. The tax revenue should be about a third of all the turnover – IF the regular tax regime is used throughout. Unfortunately, Kyrgyzstan has a number of different tax regimes which complicates the issue even further – but that’s another story – and maybe another “postcard”. Back to Statistics.

Another problem with statistics is the analysis – the way in which the original, raw, data is processed. I remember hours of study into different types of test which could be applied … depending upon things like the type of data (nominal, discrete or continuous), the population from which the sample was drawn, the size of sample, the type of operation (e.g. comparison of populations or samples, if they were “tied” or not … and so on.) The choice of the wrong test can lead to interesting, and conflicting, results.

Then there is the question of presentation – the way statistics are used. For those who know the difference between a bar chart (where the length of the bar is important) and a histogram (where the area is vital) and a three-dimensional pictogram (where it is the volume of the image presented) … will appreciate that it is easy to create a misleading impression. The same can be said for tables of figures – or even a single figure taken out of context.

Some statistics are based on assumptions … and bear little relationship to what is actually happening in the real world.

For example: as a schoolteacher, I was involved in a pay dispute back in the 1980’s. At a Parent-Teacher meeting which had been called to discuss the issue, one parent asked the question “what is the average teacher’s salary?” For some reason, most of my colleagues didn’t want to answer. Remember, I am not afraid of figures, so I stood up and I said: “It depends which figures you believe … the figure quote in the press is, (Sorry – I forget, now, but it was quite a high sum and there were sharp intakes of breath around the room) … but can we believe this?” I went on to point out that this figure was simply taken because it was the top of “Scale 2” – which meant that a third of all school teachers who were on Scale 1 could not ever hope to achieve this even after years in the profession, for another third it was the maximum that they could hope to achieve. For the other third … some, senior staff, would be earning more than this – but not all – as the scales overlapped. There may well have been reasons why this figure was chosen as an “average statistic” – but it didn’t really say much about the money being earned by the ‘average’, individual, classroom teacher.

(Please note I have been out of teaching for ten years – as I understand it, the system has changed … and this might not reflect the current situation – I quote it to underline that behind every statistic there is a story … and we should try to understand the full story as best we can).

To go back to the Prime Minister and his calculations concerning the tourist industry … I heard him in one meeting saying … “and how much does a typical foreign tourist pay per day – say, USD100? …” I wish they did – they don’t pay us that much when we organize a tour for them. In 2004 the ‘average’ sum paid to us by tourists was only USD91 a day, (about USD22 of that was tax!). OK – that’s pretty close to USD100 – but some recent market research asked the tourists themselves how much they spent and almost 30% of “Western” tourists said that they spent up to USD100 PER WEEK – not per day … about 23% said between USD100 and USD200, another 21% said between USD200 and USD350, just over 11% said between USD350 and USD500 … with ONLY 15% saying over USD500. Of course, if we assume that they are spending “say, USD100” a day … that makes USD700 per week – and most of them should have fallen into this final category.

Once again … how do we reconcile these figures?

After all this, you might be justified in thinking that I don’t take much notice of statistics. That’s not true. In fact, I spend a lot of my time collecting and analyzing statistics. I think they are a valuable management tool. They help keep me informed about what is going on, trends which I can try and extrapolate to the future and on which I can base decisions. But they are just that – tools … they are not gods, they are not infallible … and in the end it is I that has to make a decisions, and carry the responsibility. Figures need to be treated with respect and understanding … and a little distrust and a healthy disrespect. As I said earlier: “statistics raise more questions than they answer”.

Part of my job is to anticipate problems … and then find solutions to them. Sometimes those problems never actually materialize and it seems as if I have wasted so much nervous energy worrying about nothing. But sometimes …

I seem to spend so much of my time worrying about things that could go wrong, that many of my friends and colleagues think I am a pessimist. This is, as far as I am concerned, very far from the truth. I don’t necessarily consider myself to be an optimist — I prefer to think that I am a «realist».

The Kyrgyz, on the other hand, are definitely a very optimistic people — they are always «looking on the bright side». They have a great faith in the future. This is one of their great attractions as a people. Nothing seems to demoralize them.

I am not sure if being an Englishman running a tour company and two hotels in the Kyrgyz Republic qualifies me as a optimist. It is true that I and my fellow investors thought that there was a great untapped potential for the development of tourism in this region.

We took our own money and decided to «risk» it in this venture because we had the optimistic opinion that the Kyrgyz Republic would develop into a tourist destination that would be increasingly attractive to an ever growing group of travelers who wanted to visit beautiful, remote, unspoiled and relatively unknown places with an interesting people, history and culture.

Many of these potential clients may have earlier been happy to «rough it» as back packers trekking through their long summer holidays from university — especially because, as students, they had limited financial resources. Having left university, and entered employment, they now had money to spend on traveling — but little time — they had responsibilities and had to get «back behind their desk» on a specific day. They were a little older, more used to «home comforts» and were ready to pay for little luxuries like hot water.

We made our plans — and committed ourselves It was a good idea. It still is. But what happened … ?

Tourism in the Kyrgyz Republic has suffered so many setbacks, that it is hard to know where to start listing them.

We could start with the fact that it is remote (about as far from the ocean as it is possible to get), very little known in the West (sometimes it doesn’t even appear on maps which are used on internet websites — For some time, the BBC didn’t include it in the list of countries in the world if you want to subscribe to their newsletters), On the one hand this helps to make the country more «exotic», more attractive, but on the other hand it is a huge hurdle which has to be overcome in the competition with other destinations which have more familiar, «magical», names.

The fact that the country keeps changing it`s name is a problem. It is understandable that there may have been a desire to change the former soviet name of Khirgizia — but the choice of Kyrgyzstan has proved to be problematical as other countries in the region with names ending in «stan» have meant that Kyrgyzstan is identified as one of the world’s problem areas … which is largely unfair. (Well, I suppose, I would say that, wouldn’t I? — after all, I have chosen to live and work here.) Officially the name of the country is the Kyrgyz Republic — but that doesn’t exactly «trip of the tongue».

The change in the visa regulations of many of our neighbouring countries ending the «72-hour rule» which allowed transit through one country on the basis of a valid visa for another didn`t help. Tourists wanting to travel the Silk Road, or visit «the stans» now have to queue up in a number of embassies to obtain the stamps that allow them access to this cradle of history and mountain paradise.

Other bureaucratic obstacles exist — such as the requirement for foreigners to register with the authorities (OVIR) after their arrival. To be fair the government and administration seem to understand this one moment and put improvements in place — only for them to removed later on. The uncertainty generated is far from helpful.

Another form of uncertainty has been the changes in the timetable for flights in and out of Manas, and the way that prices changed in mid-season. Fortunately that tendency seems to be resolved.

The trials and tribulations (and cost) involved in trying to organize crossing the Torugart Pass may add a sense of excitement for some tourists — but prove to be too daunting a challenge for many a potential Silk Road traveller.

The change of the basis of the hotel tax led to an increase in costs — from 3 soms per guest to 2% of the cost of the accommodation, (3% in Issyk Kul), has added to costs. We effectively faced something like a fifty-fold increase in the tax burden.

The Chinese testing of atomic weapons in the deserts of Lop Nor, wasn’t as great a handicap as might have been supposed — but it was just another example of the region getting into the news for all the news for all the wrong reasons. Don’t believe the pundits who say that «there is no such thing as bad publicity»!

One of the most spectacular tourist itineraries that go to make up the network of trade routes that has come to be known as the Silk Road is the along Karakoram Highway between Kashgar and Islamabad. Kyrgyzstan is well placed as a staging post on this route to/from the West and for several years it looked as if there was great potential for developing programmes that covered the ancient cities of Uzbekistan, the mountains and nomadic lifestyle of Kyrgyzstan, the mysteries of Western China and the sites of the «Great Game» played out in the nineteenth century between the great empires of Russia and the United Kingdom in Pakistan. But then came a war in Kashmir and two neighbouring countries developing atomic weapons with the economic sanctions and border closures which followed.

A truck load of poisonous chemicals falling off a bridge into a rushing mountain stream killed a whole tourist season for the resorts on Lake Issyk Kul.

Terrorists from the Islamic Movement for Uzbekistan crossing the border and taking hostages — one year some Japanese geologists and some mountaineers of various nationalities the next.

These events led to a number of «travel warnings» being issued by various governments. A travel warning not only puts off potential travelers — they might also invalidate insurance policies. Some relating to the Kyrgyz Republic are still in force and others are being reinforced — strengthened.

A Chinese businessman being taken hostage, diplomats being killed on the streets of the capital, a bus load of traders being hijacked and murdered.

The events of September 11th had a distinct effect. Ironically, the next day had been chosen for a summit to mark the «year for the Support and Development of Tourism» — and such was the sympathy for the people of New York, Washington and Pennsylvania that the participants stood for a minute’s silence, not once — but twice, in memory of the victims. The tourist season was almost over in Kyrgyzstan — but cancellations followed and enquiries for the subsequent year dropped dramatically as Westerners were reluctant to travel far from home.

A political demonstration ends badly with several protesters being shot by police leads to reports in Russian and the Western press of a «civil war situation» in the republic.

The war in Afghanistan (another «stan») and the threat of war in Iraq helped to depress interest for the subsequent season.

The current strength of the som or is it the weakness of the dollar) has put pressure on the economics of pricing policies.

Terrorist action within the borders of the Kyrgyz Republic … street crime … corruption and poverty all take their toll on the market.

Then came SARS — and the closing of the border with China.

Less enquiries from potential tourists … more cancellations from those who had booked.

To top it all, this is the very moment when the State Committee for Tourism decides to try and reintroduce licensing. At a time of crisis for the industry — what does the government do? … try to introduce yet another hurdle for struggling tour companies to negotiate.

I could go on … but what’s the point? I think you must have got the message.

Having said all of that, you might be forgiven for asking why me I am not packing my bags and catching the next flight back to London.

The answer is simple. I am still here, and have no plans to return to the UK, because I still think that there is a great potential for the development of tourism here in the Kyrgyz Republic.

Most of what has happened has come as surprises. If part of my job is to try and anticipate problems — then I don’t like surprises. It means I haven’t foreseen the problem and am unprepared for it — I haven’t yet thought out a solution. I suppose that some of these events could have been foreseen — but I wonder who could have done so in most of the cases listed above.

Rather than surrender to circumstances and give up, I would rather see if we can succeed in «bouncing back» in the face of adversity, like the legendary phoenix, rising from the ashes as a rejuvenated, stronger entity.

It is a challenge and challenges help to make life interesting and fulfilling.

What is needed is a clear vision of what to do next.

I have already decided that 2003 is a «dead year» and started working on a marketing plan for 2004 … and beyond.

First we have to decide our market(s) and priorities. There are several types of tourism market on which the Kyrgyz Republic could concentrate: Recreation around Lake Issyk Kul, (mainly concerned with the CIS market); mountaineering and adventure tourism — trekking, horse riding etc.; Silk Road travels and other regional itineraries; Cultural tourism based on the nomadic lifestyle and homestays; independent travelers; Hunting and Fishing; Eco-tourism opportunities; Elite tourism; Winter sports; Children’s camps; Conference tourism; ….

Each market has its own advantages and problems. For example: recreation around Lake Issyk Kul may bring in the volume of visitors — but the benefits they bring are restricted to a limited area of the country and a short season. Independent travelers tend to visit other regions. Silk Road tours may only be in the country a few days — but tend to leave more money in the country per person per day. Western tourists also spend more money per person — but they have higher expectations and the facilities aren’t always in place. Silk Road travels are attractive for tourists who may visit this part of the world only once in their lifetime — but they are more likely to suffer problems from factors which are outside our own control and the tourists are in the Kyrgyz Republic for only short amount of time so only get a taste of what the country really has to offer — one thing that is desirable is for more tourists to spend longer here — and that means that they have to be informed of what is available here.

There is too much required for successful marketing for each company to deliver alone. The industry is going to have to come together, to unite and co-operate more than it has in the past to try and build a future for the common good. Each company has its own specialisms and strengths. Each has much to offer — but whilst each company undertakes marketing its own products, there is also a need for some form of co-ordination so that the Kyrgyz Republic as a whole is marketed.

We should not concentrate just on tour companies — tourism brings benefits to many sectors of the economy, and many more people can be involved in developing initiatives.

We need a marketing plan which concentrates on what we can deliver based on our existing resources here in the Kyrgyz Republic — the mountains, nature, the people, their culture. Whereas it could be said that Kyrgyzstan is poor in terms of some natural resources … oil, gas, infrastructure … it is rich in many other respects.

There is still «gold» here in these mountains — and it is not all the yellow precious metal that contributes so much to the local economy.

The mountains are still here. The fauna and flora is still an attraction. The sense of history as represented in places like Tash Rabat, or in the petroglyphs of Saimalu Tash and Cholpon Ata are still there. The people are as hospitable as ever. The culture and lifestyle is as interesting as it ever has been.

I am still optimistic — I trust that I am also being realistic.