Economic Liberalization is Necessary
December 5, 2003
Lawmakers agree that for the economy to grow, corporate taxes must be cut. But wait! This isn't news out of Washington. It's from Prague. It seems that the former Soviet bloc nation is employing the lessons that we've forgotten, says Investor's Business Daily (IBD).
- In the Czech Republic, lawmakers are moving to cut corporate taxes to 24 percent from 31 percent.
- Income taxes may also come in for a trim and Czechs also want to cut back on their excessively generous welfare system, the likes of which have smothered Eastern European economies for decades.
- Czech lawmakers were no doubt stung by automaker Hyundai's decision to reject the Czech Republic as a site to build a new plant in favor of neighboring Poland and Slovakia.
- The latter created a friendlier business climate by cutting corporate taxes to 19 percent and laying out plans for a 19 percent flat income tax to be enacted in the near future.
Consequently, if Prague wanted to improve the Czech economy, the only choice was to counter Slovakia's tax initiative. To be more competitive for the next opportunity, lawmakers seem to realize that greater economic liberalization is necessary, says IBD.
Source: Editorial, "Czech This Out," Investor's Business Daily, December 5, 2003.
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