The tax system in the Czech Republic
Economics Department working paper 245. Viewed in international context, the Czech system is broadly similar to those operated in other OECD countries. Like them, it exhibits a number of non-neutral features, some of which reflect the economy's command and control past and others which reflect compromises between the desire to minimise economic distortions and the need to implement a system that is administratively and politically practical. The evidence, reviewed in this paper, suggests that the main priorities for reform should include: eliminating the tax bias in favour of self-employed work forms; substantially reducing the number of goods and services subject to the reduced VAT rate; lowering social security contributions and increasing reliance on the personal income tax system. In addition, more use of property taxes, in particular real estate, might be warranted from the points of view of revenue enhancement and income distribution. Finally, tax administration could be strengthened by a more comprehensive registration of taxpayers, better training of personnel, tighter enforcement and the introduction of binding tax-rulings.
Long abstract
