The Prime Minister of the Czech Republic changed the concept of tax reform

In the EU, there is the rule of 3 per cent budget deficit. In any case, the Czech Republic and the United Kingdom don’t support the idea of reducing the deficit to 0.5%of GDP. But even in this limit the Czech Republic will not be able to remain.

The main income item of the state budget of the Czech Republic is the collection of income tax, 57% of all revenues. The unemployment rate is approximately 8% and the country's leadership declares that this index has been steadily declining. Hypothetically, in the case of complete absence of unemployment, the budget additionally would have received approximately 2 billion euros (data of the Institute of democratization and economic analysis (IDEA).

The Czech Republic has planed on the year of 2012 the budget deficit in the amount of 4.2 billion euros.

As far as I know, only the President of the USA, Bill Clinton, has managed to create an economy where shortages of labor force took the inveterate idlers out of the ghetto, not one generation of whom live on unemployment benefits. And even in the United States there wasn’t a zero level of unemployment. The leadership of the Czech Republic understands that and takes all possible measures for immediate filling of the budget.

Definitely raising taxes discourage entrepreneurs and businessmen. The business activity and the revenues to the budget from taxes on entrepreneurial activity will reduce due to the minimizing of production, if the government doesn’t invent, how to attract businessmen for working in the Czech Republic. As an option, the program of business-emigration for those who invest in the economy of the Czech Republic and opens up additional jobs. But without the drastic liberalization of the tax system it’s difficult to hope for the inflow of capital into the country and increase the revenues to the treasury.