Final Word from Thursday, March 3, 2011

When Parliament raised the lower VAT rate from 5% to 9% as of 2008 (and kept theupper rate at 19%), the finance ministry expected additional total VAT receipts of Kč42.4bn, to Kč 274.5bn. In reality, the extra VAT intake for 2008 was only Kč 22.7bn, toKč 254.8bn, and the ministry attributed the shortfall mainly to stockpiling and preinvoicingat the old VAT rate. The following year, when the VAT rates remained unchanged,total receipts were Kč 252.7bn, or Kč 25.9bn below the ministry's forecast.The finance minister, need we remind you, was none other than Mr. 9.1 MiroslavKalousek. The point of this exercise isn't to overwhelm you with figures, but ratherto point out that Kalousek has a miserable record in terms of predicting the impactof higher VAT. Politicians, analysts and journalists should grill him relentlessly abouthis basis for forecasting Kč 58bn in extra pension revenue from his latest VAT hike.

Glossary of difficult words

Mr. 9.1 - Kalousek's initial forecast for 2009 GDP growth was +4.3%, or 9.1 percentage points above the later preliminary figure for the actual growth;

VAT - all figures refer to "statewide" VAT receipts, not merely to the part that is included in the state budget; to verify our figures, see Page 15, Table 4 in each of the two ministerial documents we link to;

to stockpile - to accumulate a large amount of goods or materials;

to grill someone - to subject someone to intense questioning or interrogation;

relentlessly - incessantly and oppressively; steadily and persistently.


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