Entrepreneurs say reform measures would harm small businesses

Though President Vaclav Klaus' vetoes of a pair of finance reform bills late in November caused a stir in Czech political circles (See story, page A10), they were hailed by another influential group - this country's entrepreneurs and businesspeople. "We welcome the move," said Pavel Bernasek, vice-chairman of Prague-based exporter Ecimex Group. "The state shouldn't support the failing health care system by taxing employers." One bill vetoed by Klaus mandates higher health insurance payments by employers. The Czech Chamber of Commerce has warned that public-finance reform will mainly weaken small businesses, a group that is endangered by the looming European Union entry. The Czech state is heading down a bumpy road with its tax policy, critics say. The government is looking to reduce the deficit this year and not in the years to come, said American Chamber of Commerce President Weston Stacey, calling the reform short-sighted. Compared to its neighbors, the Czech Republic has a relatively high corporate tax rate. All candidate countries intend to lower their rates. Slovakia's government recently approved a flat rate of 19 percent, to take effect next year. A proposal in Hungary aims to slash corporate tax from the current 18 percent to 16 percent. Meanwhile, the Czech government is discussing a gradual push downward from 31 percent to 24 percent by 2006.