Article: Vláda a ČSSD se dohodly na protikrizovém balíčku, projde i šrotovné
http://ekonomika.idnes.cz/vlada-a-cssd-se-dohodly-na-protikrizovem-balicku-projde-i-srotovne-10u-/ekonomika.asp?c=A090408_164014_ekonomika_fih
Translation: The government and Social Democrats have agreed to the anti-crisis package; even scrapping scheme to pass
What it is about: The article describes the current GDP downturn and more importantly the current Czech government crisis after PM Topolánek’s government failed to retain confidence in the House of Representatives. The two big parties (Civic and Social Democrats) have agreed to pass their respective bills through the House. These bills include:

  • progressive social security payment through abatements
  • quickening of depreciation of firms’ capital in accounting
  • novelization of insolvency law
  • scrapping bonus of 30,000 CZK per car
  • enhancing and lengthening of unemployment benefits
  • enhancing tax abatements for children
  • enhancing children benefits

Comments: One can see that the politicians have never read a single chapter in an economic book because this is so stupid that I mean it can’t be true.

The Civic Democrats won the elections back in 2006 with a slogan of “Flat Tax 15 %”. How can they propose progressing of the social security payments (which is the only purely flat tax in our tax system)? Another aspect is that the Ministry of Finance will miss the money from the abatements.

Faster depreciation. If this is to have any impact on the firms, then it will be the following: This makes capital relatively cheaper against labor so the unemployment is to rise. Another aspect of this is that faster depreciation lowers the profits of the firms and they will pay lower taxes and again the Ministry will have less money in the balance.

Insolvency law is something I don’t really understand but certain experts have already said that this is a very dangerous bill.

Scrapping bonus for a car is something I can’t waste my words on because it’s so stupid in such an obvious way. 160 years ago there lived a man named Frédéric Bastiat who described precisely what a nonsense this is. And again — negative impact to the national balance.

The last three proposals are something you just can’t get. The unemployment rate is rising and the politicians obviously want it to rise even higher. Because when the unemployed are to get more money, the rate of job separation must go up because the motivation for retaining (and/or finding) a job will go down — my God, this is oh-so-obvious! And once again — the impact on the national balance is undoubtedly negative.

I have come to the conclusion that the Civic Democrats and the Social Democrats want the Czech Republic to go bankrupt. There is no other logical explanation.