Final Word from Wednesday, February 23, 2011



In all fairness to Finance Minister Miroslav Kalousek, he warned Czechs in the electioncampaign that he might jack up their VAT. It is indeed true, as Kalousek saidon Czech Radio yesterday, that TOP 09's campaign program included an increase inVAT as a possible way to pay for pension reform. Or course it was phrased in typicalpolitical double-talk: "The shortfall in the revenue of the existing pay-as-you-gopension system will be covered from the assets of ČEZ and if necessary from indirecttaxes." Only a soothsayer could have deduced a 10-point VAT hike from this,but Kalousek's hide is sufficiently covered. In retrospect, the more surprising thingabout TOP's election agenda is that although it foresees the conversion of VAT to anew form of supplementary pension tax, it makes no provision whatsoever for dealingwith the underlying demographic problem of the Czech pension system.

Glossary of difficult words

multi-source/multiple-source - (in this context) financed from more than one revenue or tax source;

to jack up - to raise (prices, interest rates, etc.);

double-talk - deliberately ambiguous or evasive language;

pay-as-you-go - meaning that current taxpayers fund the pensions of existing retirees and not their own retirement;

soothsayer - a person supposed to be able to foresee the future;

to deduce - to draw as a logical conclusion;

hike - increase;

to cover your hide/ass - to divert or avoid blame by taking precautions.

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