Management summary Research study „Heterogeneous VAT taxation in the Czech economy“
This study provides a case study for the Czech economy which compares the European Union trend of the VAT tax rate harmonization with the current Czech tax-policy trend of tax rate differentiation. The recent pandemic has further intensified Czech ambitions to reduce the VAT taxation for various goods and services. Yet, policymakers lack a tool to evaluate the economic consequences of such measures for the affected local businesses. The previous research concentrates on the aggregate tax multiplier for the Czech economy but misses the tax analysis at the industrial level. This study presents a model that allows the tax analysis for selected industries (sectors). The model accounts for eight industries: Agricultural sector, Construction, Industrial sector, Mining, Finance, Services, Energy sector, and other sector composed of all the remaining sectors. The simulation outcome discloses the sectors which are most susceptible to the taxation changes and suggests the most beneficial tax differentiation scheme that would boom economic production. Therefore, the findings can help policymakers in questioning the tax harmonization strategy and in evaluating the tax heterogeneity to ease the pandemic effects. The research method concerns the input-output computable general equilibrium (CGE) model.
Target groups of stakeholders: policymakers, researchers
Citation:Gawthorpe, K. (2020). Heterogeneous VAT taxation in the Czech economy. 11(2), 132–159.