The fight against tax evasion isn't a valid excuse for restrictions of basic freedoms
This is a continuation of my previous blog post about the steps back towards socialism in Czechia.
Exactly 48 years ago, on February 25th, 1948, the Czechoslovak communist prime minister Klement Gottwald (who had that job because commies won the democratic elections in 1946) visited the democratic president Dr Edvard Beneš and convinced him to accept the resignation filed five days earlier by a bunch of non-communist ministers in the coalition government who were desperately trying to stop the arrival of a communist dictatorship.
They have failed, Beneš didn't dissolve the Parliament etc. Instead, he accepted the resignations and fuilfilled Gottwald's desire to replace all of them by communist and communist-compatible ministers. The inarticulate Gottwald came to the Old Town Square and informed the pro-communist working-class losers at a rally that the people's democratic regime – the communist totalitarianism – had just begun.
Given the balance of power in post-war Czechoslovakia, this sort of had to occur. Communism was decimating Czechoslovakia for the following 41+ years. The current Czech prime minister, billionaire, and former communist snitch Mr Babiš wanted to make it spectacularly self-evident that these big-government aßholes are in charge of things again. So he imposed the first deadline for his new outrageous tool of bureaucratic terror to be on February 25th, the "Victorious February" as communists loved to call the coup.
Babiš is introducing at least two new annoying things that will reduce the freedom of the entrepreneurs, self-employed people, and corporations, and add lots of useless work to all of them:
- The electronic registers of cash payments. Everyone, including the smallest rural pubs, will have to have a gadget printing the receipts and connected to the Internet and every time someone buys a beer, Babiš will be informed about the transaction – every single cash transaction in our damn economy.
- The verification reports or whatever is the English name of this new document. That's what has the first deadline today. Every month (companies) or every quarter (smaller entrepreneurs), people doing business will have to send a full list of their cashless payments to/and/from other value-added tax payers.
At the end of 2016, the cash registers will become mandatory. Every transfer of cash will be monitored.
The verification reports that the companies have to send by today (the first report summarizing January 2016) are designed to report all cashless transfers between the payers of the value-added tax to Babiš. So this giant aßhole believes that he has the right to know the magnitude and destination of every single payment of his competitors and everyone else. And millions of clueless Czechs think that it's just OK.
The justification of the cash registers is the fight against tax evasion by pubs, hairdressers, and similar services. They are said not to pay taxes from their income and the cash registers will force them to pay. In most cases, the people simply do pay the taxes and this will only mean some extra amazing work and the loss of confidentiality of their business.
In some cases, people don't pay taxes but they need to avoid the taxation because they're right above the bankruptcy. Many of these businesses will be closed (Croatia has shown us the harmful effect of the cash registers in practice) – sometimes, the people running rural pubs etc. won't even be technically able to deal with the required IT. This will increase the unemployment and require the government to pay more money in the welfare. Also, the prices will go up by the taxes that weren't paid so far – so every consumer will ultimately pay it, anyway.
There is a third group of people who earn a lot of money and they're really evading taxation. I think that most of this grey economy will keep on existing. If the seller and the buyer agree to make a transaction that is invisible to the government, they are violating law but no one – and no bureaucratic government's invention similar to cash registers – can really prevent them from doing so. Invisible transactions carry risks but they also bring advantages.
Cash registers are primarily tools to add lots of hassle to the honest entrepreneurs and companies – and accountants who will have to do much work for them. Babiš has already accepted one argument – that this extra terror will increase the price of beer in the pubs and similar things. So he wants to reduce the tax rate for beer in the pubs as a compensation. Imagine that. So the result is that the government will collect the same amount of money from beers in the pub – but people will have far more work to deal with the bureaucracy. This is a textbook example of a totally idiotic policy.
The verification reports that companies have to send by today are claimed to fight against the carousel frauds. A ring of criminal entities sometimes sell products and services to each other in a loop and one of them disappears and pockets the value-added tax etc. I agree that this is taking place and the verification reports will make it easier to find these carousels (but some fraudsters are being found without the verification reports, too, so it's clearly not impossible now). A few billion dollars a year will be recovered. But the price is just astronomical. There will be a database of all transactions between businesses – a database ready for the communist snitch Babiš to look at, ready to be hacked by hackers, and so on.
(The unacceptably unsafe obsolete security certificates that are supposed to be used by the cash registers are a terrifying enough reason to avoid this policy by themselves but I don't want to discuss technicalities.)
About 89% of accountants hate the new verification report. (For them, it's a lot of extra work, confusion, and sometimes huge fines they will be held responsible for. When it comes to confusion: the report has to be filled incorrectly for it to be valid and it has to be sent through illegal electronic channels.) There are lots of technical problems with all those things. Each of them would be enough to see that these new inventions are absolutely crazy. But they are emerging because a slight majority of the Czechs favor this kind of junk. The supporters include people like my father who has been doing business and was supporting right-wing politicians for decades – and was anti-communist, at least "carefully", during communism. But he just parrots all this amazing rubbish by Babbish. How important it is to pay taxes. How self-employed people are thieves. How everyone is obliged to cooperate with Babiš, and so on. I believe that my generation is mostly against these "not so innovative" inventions.
At the end, the barrier that separates the people into the two camps is absolutely ideological in character. The supporters of the Babiš's terror are generally people who believe that the government is the most important thing that defines justice and has all the rights – and that taxes are the most important funds that have to move correctly. But this is nothing else than a communist, totalitarian mindset.
Victorious February 2016: the end to entrepreneurship? A 1950s-style banner by the Entrepreneur Party featuring PM Sobotka and FinMin de facto PM Babiš.
The fact that Babiš became a finance minister – despite his inability to show his clean record when it comes to the cooperation with the communist secret police – and that he has impressed millions of f*cking losers doesn't give him the right to place himself above all other entrepreneurs, to obtain the data that no one else has the moral right to obtain the information and to force millions of people do things that they are not obliged to do according to the constitution and basic decency as understood in a free society.
What most of the supporters of Babiš's policies actually want is to give the finger to the entrepreneurs and self-employed people, to show them that the country has returned to the hands of similar f*cking losers who were applauding Gottwald in 1948 when that šitty moron has barely constructed a sentence about his visit to the Prague Castle.
The very philosophy and the actual source of all the support for this bureaucratic terror is the desire of millions of losers to make the life more complicated for the people who are more skillful and successful than they are. These losers – Babiš's supporters – want to show that all capitalists are suspect and the presumption of innocence doesn't apply to them. They want to believe that it is right to be a member of an anonymous mob of millions of employees in a row and everyone else is suspect and should be harassed by the mob. For that reason, the government has the right to demand everything from the successful people.
These two mechanisms to track the transactions may be viewed just as two technicalities. But they're the most well-defined symptoms of something much more general and much more pernicious, namely the desire of millions of Czechs to de facto return back to socialism in which the government was at the center of all events and had all the tools to monitor and restrict the people's behavior of all sorts and in all ways.
You know, taxes exist in most countries. Up to a certain point, they are tolerable. But they are just tools for the government – for the nation – to collect some money for their common activities and redistribution. The collection itself shouldn't be the purpose. It should be just the "price" that has to be minimized. The purpose is to collect some money. Only the total amount of the tax revenue matters and if there are ways to collect the same money in a smoother way, one that minimally annoys the taxpayers, this way must always be preferred.
It's just absolutely terrible that once again, one can meet millions of Czechs who will disagree even with the statement that the government shouldn't unnecessarily harass citizens who haven't been shown to have committed crime.
Much of it boils down to jealousy. But even if a hairdresser doesn't pay income taxes and will be forced to do so, her income will only be some 15% lower. So instead of 6 BMW cars, she will be able to buy 5 BMW cars. It won't really change anything qualitative about the fact that she's successful while the jealous losers are not.
More importantly, the taxation isn't the primary purpose of the hairdresser work. The primary purpose is for her to earn the money and for her clients to be served. The taxes are just some small fraction of the financial compensation that the government and especially the losers that the government represents steal from the hairdresser and/or her clients. It's a tiny cherry on a pie. You simply can't promote it to something that decides about her business. If you think that you can, then you are a hardcore communist.
The right-wing parties have promised to abolish both the electronic cash registers and the verification reports a day after they return to the power. (This is a reason why Parliamentary obstructions are often sensible despite their ability to prevent the majority from deciding about policies. They highlight the fact that a certain policy is so hated by certain groups that it doesn't have the wide enough support of the nation to be sustainable in the long run.) A problem is that the non-communist politicians who made similar statements in February 1948 had to wait for 41 years to revert the Gottwaldian policies. The support for Babiš is a symptom of some terrible disease of a big part of the nation and this disease isn't guaranteed to be cured anytime soon.
A huge majority of the pro-capitalist independently productive people hate these new policies. And minister Babiš has admitted that he realizes that a million of people want him to be killed which is why he has stolen some money for professional bodyguards hired to protect his life. Wouldn't it be wiser and cheaper to notice that these critics have a point – instead of building a huge fortress around this politician whose behavior is unforgivably arrogant?
A different issue related to Czech politics. As John noticed, lots of English-speaking media including Politico.com, The Telegraph, Breitbart, and The Express have reported the words of our prime minister Sobotka that if British voters choose to leave the EU, Czechia will be among the first followers to debate the departure from the EU, or Czexit in our case. A better spelling could be Czechzit. ;-)
You must realize that these words were said by the social democratic PM whose attitude to the EU is similar to Cameron's (and may be summarized by the word "sycophancy") but who may fight for the "stay" result even more strongly than Cameron. (So it's funny when, unsurprisingly, Sobotka is often painted as a cheerleader for a Czexit just because he dared to say the word.) However, others will surely defend the "leave" result. About 59% of Czech citizens chose "Czexit" in recent surveys. Both right-wing ODS and the communists could be among those who could support Czexit. The Free Citizens Party already supports Czexit now.
The importance of Brexit, Czexit etc. is being heavily overstated. The countries would still stay in many of the EU structures that clearly work – and whether they could become independent of various detailed EU regulations would be a difficult technical decision. In particular, I do believe that Britain or Czechia after leaving the EU would stay in the shared market zone and many things about travelling would remain as simple as they are now. You may see what some of the things would look like if you consider the example of Norway or Switzerland.
So this discussion is much ado about nothing. The EU is not essential – but its impact on us can't be quite eliminated, either, because the EU is "at least" a powerful neighbor you don't want to bloodily fight against.
Politico.com also quotes some people saying that Czexit would mean the "return of Czechia to the Russian sphere of influence". This is just a lame kind of fearmongering. Why don't they say the same thing about Brexit? Obviously, if the relative power of Brussels in Prague decreases, the relative power of Moscow increases even if the absolute power of Moscow stays the same. But is that bad? We are annoyed by Brussels for many reasons – often because of things that not even Moscow used to demand us to do!
So yes, I agree that the relative influence of Moscow would increase after Czexit but I totally disagree with the knee-jerk suggestions that this fact would mean a tragedy. What is really bad is the centralized Soviet-style of governing in many countries. However, Brussels has been much more tightly connected with this Soviet spirit than Moscow in recent years!