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Czechs should remedy unjust tax burden in wake of scandal

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Prague, April 6 (CTK) – The Czech Republic should remedy its present unjust system of unequal distribution of public goods and commitments, since the failure to tackle the problem might result in big political problems, as cases such as the Panama Papers scandal show, Radim Bures wrote in Wednesday’s Právo.

The previous abstract warnings that the Czech Republic was losing significant revenues due to the use of tax havens by Czech businesses, have been personified now that concrete names leaked within the Panama Papers scandal, Bures, programme director of the Czech branch of Transparency International, writes.

For the time being, only several of the 283 Czech names involved have been released, and the rest will be disclosed gradually in a long period of time, Bures writes.

There are two kinds of political reactions to the scandal. According to one, the leaked information must be investigated for possible tax evasion or money laundering.

The other emphasises that there is nothing unlawful about tax optimising and latently indicates that there is nothing bad about it either, Bures writes.

Czech Prime Minister Bohuslav Sobotka (Social Democrats, CSSD) is one of the few to have correctly said that the information must meet with a response on the EU level, Bures writes.

The information released by Panama Papers is a strong political challenge. The emphasis placed on individual protagonists of the affair, their unveiling and possible punishment, which naturally stems from the character of the media and from people’s interest in and indignation at the affair, could actually help cover up the problem again. Several individuals may be unveiled and scandalised, but the unfavourable system would continue, Bures writes.

However, it is the system, the social principle, which is the most important of all. An equal approach to citizens in terms of their rights and duties is one of the most significant values in modern democracies. The Panama Papers scandal has shown that this principle fails to be applied, including in the Czech Republic, Bures writes.

While Czech employees see their taxes automatically deducted from their salaries, and pressure has been exerted on small tradespeople to pay taxes duly, a certain group of very rich people have been avoiding fair taxation, though probably or frequently not at variance with law, Bures writes.

In addition, the state mercilessly exacts the least possible fees from the lowest-income people, Bures continues, pointing at the system of distraints that tends to blow small debts out of proportions, and the practice of exacting fees the “payer” failed to pay as an underage child in the past.

On the other hand, no such requirements are applied to a selected group of people. It must be clear to everybody that the basic rule of equal approach to people has been violated, Bures writes.

The problem has no simple solution, as is usual with problems involving social injustice, he continues.

The punishment of possible culprits solves nothing, but legislative measures must be taken, which can happen on the EU level only, he says.

Initiatives in this respect exist, such as the directive binding supra-national companies to report their profits and taxes according to their respective countries of birth.

The present text of the directive, however significant it may be, suffers from shortcomings, and the Czech Republic may join the efforts to make it more effective, Bures writes.

The Panama Papers case is a challenge for left-wing parties and their task to pursue a policy that would create pre-conditions for the tax burden to be applied to all and exacted evenly from all, Bures writes.

The Czechs often ask why corruption has been spoken of so frequently in a situation where corruption is not widespread in Czech society. Recent opinion polls show, however, that by criticising corruption, people actually express their feeling of injustice at the unequal distribution of public goods and commitments, Bures writes.

More and more often, various symptoms indicate that the failure to solve this problem may result in big political troubles, he adds in conclusion.

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