Further discussion about the future increase of value added tax, which in these days take place on the government platform K9, damaging all companies in all economic sectors. There are two opinions In the game: the unification of the both VAT rates to 17.5% in 2013 and further increase of VAT to 19% with the exception of medicines, books and prints, which would fall under the lower tax.
“The government unfortunately does not realize that continue of discussion about future changes in the fundamental parameters, such as VAT, significantly complicate the lives of most Czech companies and businesses. Personnel policy, investment planning, cash flow, negotiating long term contracts with suppliers and much more – all Czech companies must deal with in advance. In a situation, where something is true today, than tomorrow won’t pay, it’s impossible, “says Eugene Korec, CEO of development company Ekospol. Continued discussion and diametrically opposed views of some government members are evidence that a VAT reform is ill-conceived and hastily.
Do not steal!
The government defended the new proposal, claiming that if the VAT will be united “only” to 17.5%, it will drastically cut state spending. But they forget that the state should be mainly businessman as itself. “Unfortunately, than more money takes from treasury, than more it steals. In order to save money, we need to decrease the consumption of the state as such, rather than collecting more money into the state budget. Here is a big place for savings in government substantial procurement, which is still overpriced, “said Korec.
Like other items, which now fall under the reduced VAT rate of 10%, new flats will be more expensive because of new VAT. More expensive housing and most other basic human needs is just one of many forms of negative yet planned reforms. The fall in demand, reduce investment, rising unemployment and a decline in household consumption will also have a very negative impact on economic growth and development of the Czech economy which is just recovering from recession.
Buyers will try to buy an apartment with the “old” tax today, so after the effective date of “new” VAT the new investment will freeze and we’ll have a further significant reduction of orders for construction companies. Impact on the Czech construction industry will be crucial – construction companies will lay off thousands employees. “The government’s proposal will create an army of several thousand new unemployed. Social spending on benefits and retraining courses eventually cuts a considerable portion of funds when the government will choose unified VAT, ” says Eugene Korec.
How are the EU countries? The European Commission document “VAT Rates Applied in the Member States of the European Union” (it is downloadable on the web at the following address http://ec.europa.eu) shows that in 12 from 27 European countries pay for new flats reduced VAT or generally free. The lower than Czech 10%VAT rate has eight countries (Belgium, France, Italy, Luxembourg, Poland, Romania, Slovenia and Spain). VAT rates for social housing in these countries move in the 3 – 8.5%. Are particularly interesting countries with so-called “super-reduced rate,” which is less than 5%. These include Luxembourg, Italy and Spain. However, in France buyer will pay for a new flat tax just 5.5% in Romania, 5%, 6% in Belgium and Poland, for example, in the near 8%. But in Malta and Portugal the social housing is completely exempted from VAT as an exception. List of countries at a reduced rate for housing still adds Ireland, but there is a rate equal to 13.5% and thus higher than in our country yet.
/The news portal www.stavebni-forum.cz/