Final Word from Wednesday, April 12, 2017

Taxes serve not only as a way to fund governments on all levels, but also to redistribute wealth. In theory and in practice, money from the rich goes to pay for services and benefits for the less rich, but it often works the other way around, with tax money from the less rich going directly to the rich. Society tolerates this, because the amounts taken from each individual are relatively small (but increasing all the time). The devaluation of the crown worked the same way. Each Czech paid a relatively small amount, so it's true when Gov. Jiří Rusnok says that the "exchange-rate commitment" didn't ruin anyone. But it's absolutely false when he suggests that it didn't work the other way around. The truth is that the devaluation served primarily the top 1% of Czech society by giving them easy access to cheap money. Rusnok's analysts, if they wanted to, could tell us almost exactly how many tens of billions of crowns were redistributed from normal Czechs to the super rich. [Czech Republic Great Devaluation VDČK Czech National Bank central bank]

Glossary of difficult words

benefits - payments made by the state or an insurance scheme to someone entitled to receive them; 

exchange-rate commitment - the Kč 27/euro cap on the value of the crown.

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