Lower House approves controversial cash register bill

10-02-2005

The Lower House of Parliament on Wednesday approved a bill which would in future force all shops and restaurants to use cash registers which record transactions. The bill is part of a broader effort to fight the grey economy and has sparked opposition not only from small businesses -who claim they cannot afford these costly cash registers - but also from the main right wing opposition party, the Civic Democrats. The latter say they will do their best to block this bill in the Senate and that - if it should see light of day - they will abolish it immediately, if they win the 2006 parliamentary elections. We called economist Pavel Mertlik to find out exactly what the introduction of such cash registers would mean:

"It is a system which means shopkeepers will have to report all of their sales to the internal revenue service. However, in reality, it will affect only the smallest shops and open market salespeople. For established shops - supermarkets, hypermarkets and so forth- this is nothing new because they are already using similar types of computerized cash machines. So in reality the fiscal effect of this measure will be quite limited."

Opponents of this bill say that it could seriously harm small businesses - do you believe that to be the case?

"I don't think so, because the cost of this equipment is about 20 thousand Czech crowns -that is 7 to 8 hundred euros - which is affordable even for small shopkeepers. That is not the problem. The problem is that it is a tool that may eliminate a small part of the grey economy but the bigger part of it will not be touched. I am personally in favour of it, but I see it as one of the minor supporting measures in the overall endeavour."

Is this strategy used anywhere else abroad?

"There are some countries in Europe using it such as Italy, within the European Union I'd say five or six countries, among others Slovakia."

And how effective has it proved there?

"It proved quite effective as regards some of the smallest shops and markets which were not reporting their cash flows accordingly. But if you look at the situation from a macro-economic point of view - in the Czech Republic some 60 percent of families do their shopping in hypermarkets. Only a small number -a few percent - buy in small shops."

What other measures would you suggest then?

"I think that the basic solution is in the quality of work of the internal revenue office. For years now it has not worked in the way we would expect, as do institutions in developed countries like Germany or Britain. It is basically a lack of tradition and institutional structures and also limited financial support. So we need more people, better paid and better motivated than they are now who would tax companies appropriately."

10-02-2005