The Babiš government is considering extraordinary sector-specific taxes on banks, energy companies and arms manufacturers. It expects them to raise tens of billions of crowns. The revenue would be used to reduce state budget deficits from 2028.
Critics question the design
Economists and industry representatives have criticised the plan. They argue that sector taxes could weaken competitiveness, deter investors and reduce state revenues over time. Critics point to Ireland and Switzerland, where lower corporate taxation reportedly brought higher revenues.
Corporate income tax revenue in the Czech Republic reportedly grew despite a gradual reduction of the tax rate. Critics say that record undercuts the case for higher sector levies.
Defining the arms sector is difficult
The government faces a problem in deciding which firms would be covered. Laws do not precisely define arms and ammunition production. Most defence-industry firms are not pure arms makers, however. Many produce components, raw materials, technology or software, and others make dual-use goods.
