Yeah Al that sounds pretty crap to me, Looks like Prague. They take a lot of money and create almost nothing for society, I learned recently from a friend in Brno. On the one hand, I felt the urge to defend the people of Prague, after all, they have lived in this city alone for over 20 years and I cannot imagine life in another city. Prague is not only in Europe, but also a cultural city with the lowest unemployment, a high skilled workforce and the financial and administrative center of the republic.
Statistics are straightforward
Prague estimates the European Statistical Office’s gross domestic product to be around $ 43,000 per capita. Unemployment in Prague is around 4.6%, the average wage reaches CZK 33,397.
Taxes, taxes, taxes!
However, one important thing escapes when evaluating the comparative advantages of Prague. Taxes are forgotten. Nationwide, taxes are set the same. Although the city may receive some small income through ordinances and local taxes (such as property taxes), compared to total income, it is mostly small. However, most companies are registered in Prague. Why is that so?
The reason is not only the prestige of Prague, qualified power, but also taxes. In addition to the tax burden, it is especially important for companies whether to focus on their business instead of bullying by tax auditors. In some parts, tax audits are essentially more frequent.
After all, the businessman himself Radim Jančura in an entertaining discussion show, he indicated that he was considering moving his company to Prague.
One of the bold solutions of some economists is a certain decentralization of tax revenues. After all, it is also logical, there is no objective reason why politicians “concentrated” in Prague should decide on the money collected in Ostrava. It is also not defensible that the contributions per Praguer will be several times higher than in other cities or small municipalities.
For Prague, of course, that would be a big blow. Described as follows:
- Prague politicians would have less money to redistribute = less will be stolen
- Prague has not been able to fund large-scale infrastructure projects that are accompanied by suspicions of corruption
- Praguers would be more involved in the management of public funds. Prague would collect most of the money from personal and corporate income tax
- In the event of high corruption, socially responsible companies would start leaving Prague. They would not want to subsidize corruption
- Unemployment would rise in Prague
But how would this affect in other regions? Let’s try to give the example of the Ústí Region, where local people in the elections chose a grouping of parties that introduced more transparent management, reduced taxes and significantly reduced the regulation and administrative complexity of entrepreneurs. What would this mean for the Ústí nad Labem region?
- A fairer redistribution of money would mean more money for the inhabitants of individual cities in the Ústí Region
- Lower taxes would attract companies leaving Prague
- If the relocated companies in the Ústí nad Labem region were satisfied, some of them would start doing business in this region
- Unemployment in the region would fall and the average wage would rise. The differences between Prague would decrease
- Lower taxes could also attract companies from abroad that would not operate in our country in other circumstances
Utopia? No, a model that has worked for thousands of years
Is this model really utopian and unfeasible? If we look at the historical development, city states were created first. In Greece, Athens and Sparta were big competitors, and a united Greece existed only in external threats. After the creation of the Roman Empire, there was an effort to centralize the country, and the subordinated provinces were largely independent of Rome and paid low taxes. Even in the Czech kingdom, the nobles could set taxes and often their laws on their estate. The kings paid only a small share of the taxes, which increased only in the case of wars. If they were dissatisfied with the king, then they united and fought against him.
Fortunately, we still find countries where there is a considerable degree of autonomy. Great decentralization is still in the United States. While, for example, Delaware does not pay value added tax or corporate income tax (unless you do business in the U.S. This state serves as a tax haven for many companies), California is heavily burdened by a variety of high-tax regulations, most notably high-income ones. groups. This socialist trend is the economic stagnation of this state and balancing on the brink of bankruptcy.
Detroit, which formed a pillar of American success in the 1950s, also underwent a similar development. Since then, the population has halved, the city has depopulated, and some of them have fit in faithfully with the post-apocalyptic computer game Fallout, which takes place in the United States after the nuclear war.
Communist China is not a single country either, and the provinces there are very autonomous, so we find various examples of successful, rich “provinces” and the very poor, less successful.
Centralization of science for civil wars
Unfortunately, the effort to centralize and create a super nation has always ended tragically. For example, the effort to create “communism” under the leadership of the Soviet Union.
The effort to unite 5 (but more) nations in the Balkans and create a new nation – Yugoslav, led several years after the death of one of the ideological leaders of this idea to unleash a bloody war. After all, without the local pragmatic policies in the early 1990s, the Balkan scenario could have affected Czechoslovakia as well. And at present, many Moravians and Silesians view the common tax system as unfair, and I think it would be clearly happier if they could share most of their income independently of Prague. However, current political efforts are quite the opposite.
The trend in the European Union is towards centralization, harmonization, unification. Unfortunately, we are already seeing the results of the policy today: the Greeks are on the street with Angela Merkel’s banners, which painted a mustache and a swastika, while in Germany, according to various researches, the mood is such that the Germans no longer want to contribute to southern, troubled countries. The project, which was to bring understanding between nations, brought only intolerance between nations and a huge increase in nationalism and radicalism.
The author of this gloss sometimes relaxes at the game World of Tanks and enjoys watching the reactions to it when he writes “Hi, I am from Greece, and you?” He usually gets vulgar swearing or sentences “Give my money back”.
The legitimate argument is that it would be complicated. Companies would have to work hard to keep track of where the tax is lowest, and they would move there. Several rates in different locations would complicate the situation.
This argument can be answered as follows: if something like this existed, our partner server would certainly take over Podnikatel.cz and compared all tax rates in each region. Secondly, if someone brings you money, it is in your best interest to make the process easy.
Today’s legal entities spend more than 600 hours managing taxes (in Luxembourg, for example, it is 40 hours). The author of this article is convinced that if there were competition between individual tax regions, the number of hours spent on taxes would decrease. Conversely, competition would bring tax simplification.
That this model is not possible in Europe? Just look at Switzerland, for example, which is divided into many so-called cantons. Four languages are spoken here (Italian, French, German and Romansh). High decentralization does not lead to various nationalist frictions, or what the Italian does not earn in his part, he usually does not get from a rich German.
It is also important that even if the left side won in a given district or canton, it would probably not dare to raise taxes. Because that would mean only one thing – a mass exodus of companies to other cities, as there would be no reason to stay in the city or region. And new companies would probably not be created due to the hostile business environment.
The author has been living in Prague since he was 5 years old. I consider Prague to be the most beautiful city in Europe. However, he believes that other cities should also have the right to large-scale infrastructure projects and to improve the quality of life of local people.