Final Word from Wednesday, November 16, 2011

We've said it before, and we'll say it again: Raising VAT ata time of declining household consumption and a stagnatingeconomy is a fatal mistake. Instead of unifying the twoVAT rates next year at 19-20% (with a few exceptions), whichnow seems almost certain to happen, the Nečas governmentshould LOWER the VAT rates as a way to preserve jobs in retailingand manufacturing. We might be the only ones in thecountry openly taking this stance, but this does not make allthose economists with their fancy Ph.D.'s right. These economistshave become a tool in the hands of politicians who wantto raise the VAT as a quick fix instead of curbing their owntheft from the state budget. The general trend is already clearto anyone willing to look: Czechs are changing their shoppinghabits, either by cutting non-essential spending or by travelingto Germany or Poland to shop, and are also perfectingother ways of circumventing taxes. Raising VAT acceleratesthis vicious circle, and everyone will end up paying the cost.

Glossary of difficult words

quick fix - a quick solution to a problem, esp. one that is only temporary;

to curb - to restrain or keep in check;

to circumvent - to find a way around an obstacle (including tax fraud, in our example).

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