Fiscal systems in transition: The case of the Czech income tax

Big Bang vs. Gradualism

“…The Czech R epublic, on the other hand, had little experience with taxation because of the strict CPE standards (which didn't require a complicated tax system) (Coulter, 1995(Coulter, , p. 1008 . The country was forced to implement taxes without having the experience of knowing how successful they would be.…”

“…The income tax introduced in 1993, which effectively replaced the wage tax (Coulter, 1995(Coulter, , p. 1011 , is progressive and ranges from 15 percent to 40 p ercent of personal income (Bryson, 2000, p. 514). Direct and indirect taxes were also fairly balanced at their inception, with 54 percent accounting for the indirect portion (Bryson, 2000, p. 514).…”

“…The property tax was the greatest source of funding for such municipalities, but is largely flawed due to the fact that " policy design and implementation remain almost exclusively the domain of th e ministers of Finance and Interior" (Bryson, 2000, p. 512) , who cannot adequately determine what property tax levels should be for the distinct needs of all municipalities. For instance, property taxes from 1989 to 1993 actually decreased from 1.4 percent of overall tax revenue to only 1.0 percent, even though there was clearly a demand for higher levels of local funding (Coulter, 1995(Coulter, , p. 1011. To circumvent the issue, municipalities have resorted to selling off land given to them by the government during privatization, but these are sources of one-time funding and tllls method will merely prolong the need for a re-evaluation of the system (Bryson, 2000, p. 514) .…”

Distributional impacts of public policies : essays in ex-ante and ex-post evaluation

“…Highly diverse, quickly changing and complex national policy agendas are more cumbersome to model. For example, Coulter et al (1995) note that in 1989 microsimulation of indirect taxes in the Czech Republic was unfeasible as at that time there were 1506 turnover tax rates varying from -291% to + 88%. This made the system hard to grasp, document and model in a robust way and partially explains the prevailing construction of static MSM models.…”