Final Word from Friday, January 22, 2010
Companies spend small fortunes to optimize their tax liabilities, so when a tax windfall drops into their lap, their natural inclination is to hold onto it. Convincing Czech companies to voluntarily give up their social-tax refunds for the first half of 2007 (brought about by a screw-up in Parliament) will have to be based on more than just good-citizenship arguments. A workable solution might be to tie the refunds to something manufacturing companies have been clamoring for - subsidized reduced work weeks, known as "Kurzarbeit." A formula could be found that takes into account court fees, late-filing penalties, risks to insured employees, and the cost to the state if no compromise is found. Companies that waive their right to a refund could be offered a credit on payroll taxes for maintaining a certain level of employment. It's messy, but much less so than most of the options mentioned so far.[Czech Republic]
Glossary of difficult words
windfall - a large payment or earning, esp. one regarded to be excessive or unfairly obtained;
inclination - natural tendency;
social-tax refunds - if the refunds are upheld in the court, they could reach an estimated cost to the state of Kč 100bn;
screw-up - a situation that has been completely mismanaged or mishandled;
good citizenship - behaving as a responsible citizen should, regardless of personal interest;
to clamor for - to make a vehement protest or demand;
to waive - to refrain from exercising a right;
payroll taxes - taxes withheld from an employee's paycheck;
messy - complex, convoluted.