Final Word from Tuesday, June 24, 2003

Czech entrepreneurs have enjoyed favorable tax treatment relative to employees, which has provoked the ire of corporate competitors. When he was still local head of Dell, CEO Gabriel Berdár of Český Telecom complained that companies using contractors instead of employees can save about 50% of labor costs. The cabinet intends to address this as of next year by raising the self-employment tax and imposing a minimum tax. The Association of Entrepreneurs estimates that a quarter of the current 700,000 self-employed people could cancel their licenses. But they might find that it isn't so easy. The paperwork at the trade-licensing, tax, social-security and health-insurance offices, as as well as the commercial registry, can be so time-consuming that even if they start now, they might not be finished by Jan. 1. If the government wants to make it harder to be self-employed, it should also make it easier to stop being self-employed.


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