Flat Tax, Flat Wallet

Money has been on my mind this entire week—making more of it, spending less of it and casting bad juju on anyone trying to take it from me.

Blame it on the Czech Republic's new flat income tax rate that goes into effect this month. Some say it's 15%. Others have mentioned 19%. Meanwhile my HR rep sent me a document outlining a three-year step-down plan: 21-20-19, with the 19% rate taking effect in 2010.

No matter. The big news is that folks in the upper reaches of the old tax rates have been celebrating. Many are eagerly awaiting their first “tax relief-era” paychecks at the end of this month.

I should add myself to the list, but I hesitate. Why? Because when it comes to government and “free money” aka tax relief two things are bound to happen:

a) Getting that money won't come so easy

b) The boost in your paycheck will be matched by a boost in the price of everything else

Scenario A

Turns out getting the flat tax rate isn't an automatic process. If you're a member of the invasive species known as Expatriatus Vulgaris you'll need a Danovy Domicil, a special document from your local finance office, a place where everything is in Czech, and so is everyone there. (Dante's Inferno, here we come.) To get this DD, you need a host of documents and you have to pay a 100kc. Look at that: to get free money you have to pay money. You might get the DD that day or in a week or maybe never. Depends on the whim of the finance office in the district you live in. If you get the DD, rejoice but only for 11 months, because you'll to do it again next year and any year you want that "relief". (If you don't get the DD, you have to wait until the end of the year to claim the money you lost out on.)

Scenario B

I went to Tesco one evening late last year and walked out wondering if the local chickens had gone on strike. A crate of 30 eggs that I normally bought at 54kc had shot up to almost 80kc. Squawk! Other price increases, not as drastic, began showing up in often-purchased products—yogurt, from 9kc to 11kc; milk, from 15kc to 17kc; salad mix, from 29kc to 32kc. My 50kc soup and garlic bread combo from Kava, now 55kc. What was up?

Last Sunday, at dinner with Darcie, she explained: her Czech friends told her that businesses had gradually started to up prices in anticipation of the boost to consumers' cash flow. Fact or fiction? As a shopper, it's hard to argue against the former. Movie tickets, once 159kc are now 169kc. A crazier leap than the price of eggs? Monthly metro passes, formerly 460kc, now 550kc.

While we high-salary expats may grumble at the various spikes in the price of daily living, I wonder how Czechs, many of whom make less than we do, will deal. I know little about the tax relief to say if it has loopholes or exceptions for low wages. If not, there might be a different political party running the Czech government after the next elections.

In closing, I refrain from rejoicing because:

a) My local finance office has yet to issue my Danovy Domicil. If I don't receive it before Friday I'll have to wait till February to see what happens to my paycheck.

b) And whatever I imagine the increase in my paycheck will be, I should deduct 50% to get an approximate of what my real “extra money” is.