Final Word from Thursday, August 21, 2003

The cabinet's public-finance reform calls for requiring unincorporated businesses with annual revenue of more than Kč 3m to use double-entry bookkeeping. This will mean more tax revenue for the state. At the same time, some companies can benefit from the conversion by getting a better picture of their financial position. The same could be said of the government if it kept double-entry accounts. The Economist noted that in the case of the U.S., the government is on the verge of insolvency but is able to hide this with cash-based management. The Czech government, like many others, also risks going broke in the future. It's running increasingly large deficits and says little about its burgeoning future liabilities (pensions, healthcare, loan repayments). By dwelling on the minutiae of next year's budget deficit, Czech politicians are avoiding the broader long-term issue.


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