Tax and Welfare Reforms in the Czech Republic—Structural Implications and Challenges

March 1, 2008

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

The paper provides an analysis and discussion of key structural implications of the 2007 and 2008 welfare and tax reforms in the Czech Republic. Based on a detailed micro-study of marginal and average effective tax rates for individuals at various points along the earnings curve, it concludes that while incentives to save and invest have improved, work incentives are being severely hampered by high marginal effective tax rates for low- and middle income individuals. The reforms also fail to address the most pressing fiscal concern: to put government finances on a sustainable path.

Subject: Corporate income tax, Income, Personal income, Social security contributions, Wages

Keywords: government spending, labor market, low income, tax burden, tax revenue, WP

Pages:
52
Volume:
2008
DOI:
https://doi.org/10.5089/9781451869149.001
Issue:
052
Series:
Working Paper No. 2008/052
Stock No:
WPIEA2008052
ISBN:
9781451869149
ISSN:
1018-5941

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