Excessive bureaucracy is costing Czechia: A new plan to cut red tape could help

The Czech Chamber of Commerce in Czechia presented a plan to streamline the country's economic growth, which faces obstacles due to extensive administrative and regulatory demands. These requirements, affecting both businesses and the government, result in significant time consumption and financial expenditures.

The comprehensive plan involves more than 400 adjustments designed to alleviate this burden. Among these proposed changes is the elimination of the annual requirement for taxpayers to sign their income tax declarations. The Chamber of Commerce is anticipating a cross-ministerial discussion to delve into the suggested amendments. 

According to Chamber of Commerce president Zdeněk Zajíček, entrepreneurs are grappling with considerable challenges, such as workforce attrition and non-productive tasks, both caused by intricate legislation and unnecessary administrative complexities. Zajíček underscored that these factors result in both the government and companies losing significant time and financial resources. However, he also pointed out that the state's efforts to reduce this burden are often superficial.

Zajíček emphasized that the initial step towards addressing this issue is to provide the government with an exhaustive list of the residual obligations that entrepreneurs still face. An illustrative instance of an irrational administrative requirement is the mandatory annual signing of income tax declarations, which Zajíček argues is redundant in cases where no substantial changes have occurred for most employees.

The Chamber of Commerce has proposed several changes aimed at streamlining bureaucratic processes. These include abolishing the logbook for employees who use company vehicles for private purposes, expanding the employee's autonomy in scheduling working hours, shortening the retention period for archived documents, and consolidating forms associated with the Water Act. These proposals have already been submitted to the government office, according to the press release.

Notably, Zajíček conveyed that despite the potential for substantial savings – in the order of tens of billions of crowns – from the government's consolidation measures, the real key to stabilizing public finances lies in identifying and addressing the systemic flaws in the economy. He stressed the necessity of a robust overhaul of the administrative framework to avert a recurrence of the current situation within three years.

According to the Legal Electronic System for Entrepreneurs, a tool devised by the Chamber of Commerce to assess the regulatory burden on entrepreneurs, self-employed individuals are required to adhere to a huge 1,719 obligations outlined in 21 fundamental business laws. Conversely, employers must grapple with at least 2,100 obligations imposed by the state.

In light of these challenges, the Chamber of Commerce's proposal signifies a pivotal step towards fostering a more conducive business environment, ultimately fostering sustainable economic growth.