Abstract
In this chapter we will discuss fiscal policy in the Czech Republic (or former Czechoslovakia), study state budget developments and some related issues, and analyze the connection between the budget and privatization as a unique source of state revenues.
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Notes
Although this is the official position of the government, substantial amounts were provided to both banks and enterprises. For instance, the government helped to recapitalize major commercial banks and assisted some companies either directly with money or with guarantees. For more detail, see Tůma (1994).
Naturally, one’s perspective on this is affected by political affiliations of the observer, and some people, especially Social Democrats, argue that the situation with an aging the population is not serious.
As an illustration, we recall the biggest case of tax evasion—known as the “light heating oil” affair—which happened in 1993. Some gasoline importers marked their barrels as light heating oil, which had VAT of 5 percent, instead of the 23 percent VAT applied to gasoline. Through this tax evasion, the state lost about twenty billion crowns.
The CSOB was formerly the only Czechoslovak bank operating in foreign countries. It had provided considerable loans to “risky”countries, but in 1990s, it has slipped into troubles when these loans were not repaid.
This clearing was counted in ECUs. The agreement set a limit for the amount that one country could owe to the other. If this limit was exceeded, the debtor had to pay off the amount and clear the system.
Although only very few commodities remain to be deregulated (rent, energy, railway transport, and so on), they are responsible for about 20 to 25 percent of a typical consumer basket.
See, for example, Frydman and Rapaczynski (1994).
The value of property transferred freely to the public is hard to estimate. Restitution claims amounted to 70 to120 billion crowns, vouchers account for approximately 365 billion crowns of accounting value.
See the annual reports of the National Property Fund for more details on its functioning and performance.
The NPF did not even have money for this purpose and had to issue debt totaling ahnost 40 billion crowns.
Konsolidační banka is another state institution whose main objective was to take over loans on inventories from banking sector. Presently, Konsolidační banka is more active in restructuring the economy.
It is said that all these NPF bills are held by foreign investors.
This is quite often a major incentive for governments in other countries, both in developed and transition economies. Impacts of such an approach are discussed in the literature (see, for instance, Christodoulakis, 1992).
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© 1997 Springer Science+Business Media New York
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Kubín, J., Tůma, Z. (1997). Fiscal Impact of Privatization and Fiscal Policy. In: Mejstřík, M. (eds) The Privatization Process in East-Central Europe. International Studies in Economics and Econometrics, vol 36. Springer, Boston, MA. https://doi.org/10.1007/978-1-4615-6351-8_5
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DOI: https://doi.org/10.1007/978-1-4615-6351-8_5
Publisher Name: Springer, Boston, MA
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