Bratislava, October 4 – 5, 20121st GLOBAL FLAT TAX FORUM             Jiří Schwarz      National Economic Council        of...
Flat tax in the Czech Republic•   Complex tax reform•   A sole tax rate for all incomes•   A sole VAT rate•   Reduction of...
Flat tax reforms in the Czech               Republic• Flat tax → Increase of individual freedom  in society?  – Easier and...
Government revenue                  120                  110                  100                   90                   8...
Government expenditure                  110                  100                   90                   80Index, 1995=100 ...
Government expenditure                      16000                      14000                      12000                   ...
Tax structure• Tax structure is important, because spending  very much depends on the tax structure  (Mulligan).• Case of ...
Fiscal rules• Tax reform based on simplification and flatter  tax rates has to be combined with greater  control over gove...
• Discussed fiscal measures:  1. Balanced budget (The primary rule)                  Budgetary surplus/deficit as a perce...
Fiscal harmonization – way to fiscal             centralization• Representatives selected by modern  democracies are neith...
Fiscal harmonization vs fiscal               competition• Supports position of supranational  policymakers, bureaucracy an...
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Jiri Schwarz on Flat Tax Forum 2012

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Jiri Schwarz on Flat Tax Forum 2012

  1. 1. Bratislava, October 4 – 5, 20121st GLOBAL FLAT TAX FORUM Jiří Schwarz National Economic Council of the Czech Republic
  2. 2. Flat tax in the Czech Republic• Complex tax reform• A sole tax rate for all incomes• A sole VAT rate• Reduction of duplicationsSTOP 2006
  3. 3. Flat tax reforms in the Czech Republic• Flat tax → Increase of individual freedom in society? – Easier and more efficient tax collection – Do we have barriers on government spending?
  4. 4. Government revenue 120 110 100 90 80Index, 1995=100 70 60 50 40 30 20 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Czech Republic Slovakia
  5. 5. Government expenditure 110 100 90 80Index, 1995=100 70 60 50 40 30 20 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Czech Republic Slovakia
  6. 6. Government expenditure 16000 14000 12000 10000Euro per inhabitant 8000 6000 4000 2000 0 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Czech Republic Estonia Latvia Lithuania Slovakia
  7. 7. Tax structure• Tax structure is important, because spending very much depends on the tax structure (Mulligan).• Case of VAT introduction in 1960s and rapid expansion of government spending.
  8. 8. Fiscal rules• Tax reform based on simplification and flatter tax rates has to be combined with greater control over government spending.• Key incentives for of fiscal rules introduction: – to limit public expenditures – to stop indebtedness – to create barriers for spontaneous growth of bureaucracy
  9. 9. • Discussed fiscal measures: 1. Balanced budget (The primary rule)  Budgetary surplus/deficit as a percentage of GDP:  Example: If the GDP growth equals 4 %, state budget will generate a surplus at the level of 1 % of GDP 1. Public debt (The secondary rule) – Public debt as a percentage of GDP: – Debt over 40 % of GDP: Expenditures must be limited… – Debt over 50 % of GDP: No transfers from funds, no expenditures for representation, no needles investments…
  10. 10. Fiscal harmonization – way to fiscal centralization• Representatives selected by modern democracies are neither altruistic, nor too concerned about morality, however, they can hardly resist the temptation to legislate, regulate and increase expenditure.
  11. 11. Fiscal harmonization vs fiscal competition• Supports position of supranational policymakers, bureaucracy and interest groups operating on international level.• Lowers position of national politicians and interest groups operating only on the national level.
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