Squad tasked with tax evasion clampdown up and running

It is one of the flagship measures of finance minister Andrej Babiš aimed at stamping out the country’s rampant tax evasion and filling the state coffers. And even before it is officially supposed to be up and running the special tax evasion unit, popularly dubbed Kobra, is already at work and looking forward to changes in the law that will make its task easier.

Andrej Babiš, photo: Filip Jandourek

The Czech government on Wednesday agreed 3.5 percent wage hikes next year for civil servants and teachers with negotiations still locked on what kind of higher increases might be offered for police and firemen. The government has already agreed that next year’s spending limit will be raised by 16 billion crowns.

The centre-left government says that it is coping with pent up wage demands caused by previous austerity measures and the need to get investment in infrastructure rolling again. But all that’s going to put a bigger strain on the still to be decided budget and the savings and more effective revenue raising measures Mr. Babiš has promised to bridge the gap.

Some existing measures to deal with tax evasion have already come unstuck. High guarantees of 20 million drowns demanded on petrol station operators as a means of dealing with massive tax fraud on fuel have been partially struck down by the Constitutional Court as an unwarranted limitation on business.

Recent trials of illegal spirits and methanol gangs have also underlined how criminals got away for years with massive and sophisticated scams that earned billions of crowns for years before they were found out. So, the pressure is on for Babiš’ clampdown on tax fraud and revenue raising steps to start delivering. And one, the much hyped special tax evasion squad, Kobra, is already up and running ahead of its official launch in mid-June.

Taking inspiration from Slovakia and the success of a special squad up and running there for two years already, the Czech equivalent based on close cooperation between police, tax offices, and the customs service is already working on some cases. But all the staff from the three services have still to be selected and dispatched to the new unit and the administrative paperwork finalized. David Chovanec is the acting head of the Czech customs service: ‘There will be a central unit staffed at the highest level and then teams in every region of the country.’

Photo: Barbora Kmentová

As well as earlier cooperation between state officials dealing with tax fraud, the bosses of the new unit are also looking for changes in the law which would make their job a lot easier. One of those being prepared would make preparations for tax fraud a criminal offence as well as carrying out the act itself. It’s believed that in many cases only the front men for major tax fraud are being caught and punished at the moment not the real movers and shakers. Another change being demanded is for state authorities to be given automatic access to the bank accounts of suspected criminals.

Opposition politicians, including former finance minister and deputy TOP 09 leader Miroslav Kalousek’s, say many of Babiš’ moves are not much more than playing to the grandstands. The results should be clearer next year when it becomes clear whether the budget sums are adding up or not.