Does political orientation affect economic indicators in the Czech Republic?

A ailable online a www.sciencedi ec .com Jou nal o Policy Modeling 44 (2022) 1219–1231 www.else ie .com/loca e/jpm Does poli ical o ien a ion a ec economic indica o s in he Czech Republic? Michal K ajňák a,⁎,1 , Ka eřina K zikallo á a,2 , Václa F ied ich b,3 a VSB – Technical Uni e si y o Os a a, Facul y o Economics, Depa men o Accoun ing and Taxes, 17. Lis opadu 15/2172, 708 00 Os a a, Czech Republic b VSB – Technical Uni e si y o Os a a, Facul y o Economics, Depa men o Ma hema ical Me hods in Economics, 17. Lis opadu 15/2172, 708 00 Os a a, Czech Republic Recei ed 3 May 2022; Recei ed in e ised o m 22 Augus 2022; Accep ed 24 Sep embe 2022 A ailable online 10 Oc obe 2022 Abs ac The a icle e alua es he ela ionship be ween he ax bu den on labo and magic quad angle indica o s in he Czech Republic in he yea s 1993 h ough 2020. The a icle examines whe he indica o s such as he e ec i e a e o ax a e on labo a ec he mac o-economic indica o s o he magic quad angle. The o iginali y o his s udy lies in he ac ha i deals wi h he in luence o poli ical ac o s. The analysis shows he s onges co ela ion be ween he g ow h o g oss domes ic p oduc and he implici ax a e on labo . Mo eo e , he s udy inds ha he ac o wi h he mos signi ican – and su p ising – bea ing on he indings is ha ac ha igh -wing Pa liamen beha ed like le -wing pa ies. The conclusions eached by his s udy u he unde line he signi icance o he ax bu den on labo on he selec ed magic quad angle indica o s. © 2022 The Au ho s. Published by Else ie Inc. on behal o The Socie y o Policy Modeling. This is an open access a icle unde he CC BY license (h p://c ea i ecommons.o g/licenses/by/4.0/). Subjec classi ica ion codes: C01; E62; H24 Keywo ds: Pe sonal income ax; E ec i e ax a e; Magical quad angle; Implici ax a e on labo ; Poli ical o ien a ion h ps://doi.o g/10.1016/j.jpolmod.2022.10.001 0161-8938/© 2022 The Au ho s. Published by Else ie Inc. on behal o The Socie y o Policy Modeling. This is an open access a icle unde he CC BY license (h p://c ea i ecommons.o g/licenses/by/4.0/). ]]]] ]]]]]] ⁎ Co esponding au ho . E-mail add ess: [email p o ec ed] (M. K ajňák). 1 ORCID 0000–0003-4924–3583 2 ORCID 0000–0001-6863–4630 3 ORCID 0000–0003-0076–5233 1. In oduc ion A coun y's economic policy is de e mined by he go e nmen . This a ec s he le el o in la ion, he unemploymen a e, g oss domes ic p oduc and he sha e o he cu en accoun balance on g oss domes ic p oduc . These indica o s make up he so-called ‘magic quad angle’. The coun y’s poli ical di ec ion in luences no only hese indica o s bu also he ax bu den, which is mos o en exp essed as he pe sonal income ax a e. Acco ding o OECD me ho- dology he ax a e includes all paymen s o he s a e – no only pe sonal income ax, bu also heal h insu ance and social secu i y con ibu ions. To enable s anda dized in e na ional com- pa ison his OECD-de ined ax a e is calcula ed om he a e age income o unma ied childless axpaye s (OECD, 2021). The o e all pe sonal ax a e – he implici ax a e – de- sc ibes he p opo ion o pay oll expendi u e on pe sonal income ax and social secu i y con- ibu ions. The o e all ax bu den is de ined as he a e o pe sonal income ax and manda o y social secu i y con ibu ions. Tax and social le ies inc ease employe cos s (Bingley & Lano , 2002). As hese le ies inc ease, he compe i i eness o he domes ic labo ma ke dec eases (Nielsen & Smy h, 2008). High labo axa ion may a ec mac oeconomic indica o s such as he unemploymen a e o economic g ow h a e. As s a ed by Su ugiu e al. (2012), high ma ginal axes educe ou pu ; he subs i u ion e ec esul s in he axpaye p io i izing hei leisu e ime a he expense o wo king ime which has an impac on he unemploymen a e. A high le els o unemploymen , one canno expec economic ou pu o be high, which nega i ely a ec s g oss domes ic p oduc and he e o e economic g ow h. Low domes ic ou pu a ec s impo s hus in luencing he cu en accoun o he balance o paymen s. The in la ion a e, whose ela ionship wi h unemploymen is shown by he Philips cu e (Nedomlelo á, 2008) also gains signi icance. The e o e, all mac oeconomic indica o s (in la ion, unemploymen , economic g ow h a e and he a io o he cu en accoun balance o g oss domes ic p oduc ) can be a ec ed by he o e all pe sonal ax bu den. A he same ime, i ollows ( om he ‘magic’ in he magic quad angle) ha mee ing one objec i e o en esul s in ailu e o achie e o he objec i es. These indica o s can hus be in luenced by he coun y's poli ical o ien a ion. Is his he case in he Czech Republic? Is i ue ha go e nmen s implemen economic policy acco ding o hei poli ical leanings, o a e hei si ua ions whe e a igh -wing go e nmen can be cha - ac e ized by le -o ien ed economic policy and ice e sa? The main aim o his a icle is o e alua e he ela ionship be ween poli ical o ien a ion and he abo e-men ioned economic indica o s ( he e ec i e ax a e, implici ax a e on labo , and magic quad angle indica o s) in he Czech Republic in he yea s 1993 h ough 2020. Comp ehensi e s udy e alua ing he in e ela ionship be ween pe sonal income ax a es, magic quad angle indica o s and poli ical o ien a ion has no been ca ied ou in he Czech Republic, he ein lies he alue o his pape . Selec ed s udies, o example, Bok ošo á (2005) and Ku ic (2015), only e alua ed he economy based on he ela ionship be ween he mac o- economic indica o s o he quad angle. This a icle speci ically deals wi h he Czech Republic, whe e iscal policy is o en im- plemen ed inconsis en ly: he di e ing agendas o successi e uling pa ies lead o equen changes o he ax code conce ning income ax a es, pe sonal allowances and ax elie , wi h implica ions o he axpaye 's ne wage. Pay oll cos s, including income ax, ha e an impac on he employe 's o al cos s and he en i e p oduc ion p ocess (Bingley & Lano , 2002). Tax a es hus ha e an e ec on economic g ow h, unemploymen , in la ion, and o eign ade. M. K ajňák, K. K zikallo á and V. F ied ich Jou nal o Policy Modeling 44 (2022) 1219–1231 1220 The pape is s uc u ed as ollows: he in oduc ion is ollowed by an ou line o he heo- e ical backg ound (Sec ion 2) wi h ocus on pe sonal income ax. Sec ion 3 includes he da a we used o he analysis. Sec ion 4 p esen s he esea ch me hodology. The main pa o he a icle is Sec ion 5 whe e we p esen he esul s o ou analysis. The las sec ion o he pape summa izes he esul s o ou esea ch opic. 2. Theo e ical backg ound In he ield o economic policy, he di ec ion and hus he p og am o le - and igh -wing poli ical pa ies o en di e g ea ly om one ano he . The Czech Republic was es ablished in 1993 a e he di ision o he Czechoslo ak Republic. ODS, a igh -wing pa y, was he i s o come o powe ollowing democ a ic elec ions in his new s a e. In his analysis, Šimoník (1996) ound ha in he i s yea s o he independen Czech Republic he e was a sligh shi in o e p e e ence away om igh -wing poli ics, mainly due o cen is o e s mo ing o he le , which was he eason why a le -wing pa y won he nex elec ion. O e all howe e , he cen e- igh p e ails in Cen al and Wes e n Eu opean poli ics. Acco ding o a s udy by Choma e al. (2010), le -wing pa ies do no always ha e o pu sue pu ely le -wing poli ics and igh -wing pa ies do no necessa ily ollow a pu ely igh -wing agenda. On he con a y, he e a e wo dimensions: social le - igh and economic le - igh . Poli ical o ien a ion in Cen al Eu opean coun ies is pa ially changing, as e idenced by ce ain s eps in economic policy as shown in he s udies o Hlousek and Kaniok (2021), and Hooghe e al. (2002), o example. The s a e's iscal policy aims o ensu e economic g ow h, ull employmen , p ice s abili y and ex e nal economic balance by in luencing agg ega e supply and agg ega e demand. Acco ding o Bue ne and K ause (2021), iscal policy ins umen s include a p og essi e income ax. The gene al p inciples o pe sonal income ax a e s a ed by du P ezz and S iglingh (2018), among o he s. The main goal o p og essi e pe sonal income ax is o ensu e he edis ibu ion o income in he economy. The le el o go e nmen e enue and expendi u e impac s agg ega e demand and supply which a ec s economic g ow h, employmen , p ice s abili y and ex e nal economic balance. The amoun o go e nmen e enue is also a ec ed by he ex en o he ax gap. (Fo mo e abou he de ini ion and me hodology conce ning he ax gap and i s de e mi- na ion see, o example, Mo a ec e al., 2018). Pe sonal income ax can be de ined as p o- g essi e in mos coun ies (Sanz-Sanz, 2020). Tax p og essi i y ensu es an au oma ic coun e - cyclical e ec : in a pe iod o economic g ow h, income and ax inc eases, bu because o he p og essi eness he ax g ow h is highe han he g ow h o income; in a pe iod o ecession he opposi e is ue: he ax bu den dec eases as e han incomes do (Chen, 2019; Oddou, 2020). The e ec s o poli ical o ien a ion on ax policy, economic g ow h and employmen ha e no been discussed in specialis s udies. In he ci ed s udies, only indi idual magic quad angle indica o s we e examined. The ac ha his opic has no been discussed in he con ex o he Czech Republic, and only minimally ega ding o he coun ies, con ibu es o he uniqueness o he esea ch included in his a icle. The ela ionship be ween he ax bu den and economic g ow h in 35 coun ies o he O ganiza ion o Economic Coope a ion and De elopmen (OECD) was he subjec o a s udy by And asic e al. (2018). I de e mined ha i ax e enues inc ease by 1%, g oss domes ic p oduc inc eases by 0.29%. Simila posi i e co ela ion be ween hese a iables is con i med by Nguyen (2019), and Bleaney e al. (2001). A combina ion o app op ia e iscal policy ools can he e o e a ec economic g ow h (Su ugiu e al., 2012). Labo axa ion in ela ion o M. K ajňák, K. K zikallo á and V. F ied ich Jou nal o Policy Modeling 44 (2022) 1219–1231 1221 economic g ow h does no always posi i ely co ela e, especially be ween median- and high- income households, as men ioned by Biswas and Chak abo y (2017). I labo axa ion is high, a u he inc ease in he ax bu den can, on he con a y, educe he deg ee o economic g ow h. Ko lán and Macho á (2013), and Izák (2011) ound ha axa ion has a nega i e impac on economic g ow h. An inc ease in unemploymen and hus he slowdown o economic g ow h a e he con- sequences o he excessi ely apid g ow h o labo cos s. The eason o he inc ease in labo cos s in he Eu opean Union in pa icula a e highe labo axes. An inc ease in he ax a e on labo by 14% would esul in an inc ease in unemploymen by 4% and he educ ion o eco- nomic g ow h by 0.4% pe yea in EU coun ies (Da e i & Tabellini, 2000). The g ow h o labo cos s led companies o eplace labo wi h capi al, which in u n slows down an economic g ow h. Tax policy can be an e ec i e ins umen o educing unemploymen and inc easing eco- nomic g ow h (Michaelis & Bi k, 2006), while Boh inge e al. (2005) s a es ha axa ion as a ool o educing unemploymen does no ha e a signi ican e ec . In he long e m, an inc ease in he ax a e leads o a ise in he na u al a e o unemploymen (Ne e auskiene Okune iciu e e al., 2017). The inc ease in p ices pu s inc eased p essu e on employees o inc ease wages. I he ax a e is p og essi e, he e is an inc ease in he ax bu den. Unless he ange o pa icula bands o pe sonal income ax base a ea a e adjus ed acco ding o p ices, he axpaye ’s highe income is subjec o a highe ax a e. The e o e, i is possible ha , despi e he g ow h o g oss wages, he eal ne wage is lowe a e axa ion (Nam & Zeine , 2016). The ax bu den he e o e becomes mo e p og essi e (Ge be e al., 2020). Fo mo e abou ax p og essi i y and he me hod o measu ing see, o example, Wisniewska-Kuzma (2020), and K is jansson and Lambe (2015). 3. Da a used o he analysis Fo he pu poses o analysing he ela ionship be ween ax bu den and magical quad angle indica o s and poli ical o ien a ion in he Czech Republic (see Table 1) he ollowing da a has been ga he ed: • he unemploymen a e (UNEM), in la ion a e (INFL), g oss domes ic p oduc g ow h (GDP) and he a io o he cu en accoun balance o paymen s o g oss domes ic p oduc (CA/GDP) ha e been sou ced om he Czech S a is ical O ice (Czech S a is ical O ice, 2020), • he e ec i e ax a e (ETR) de e mined in gene al e ms (1), • he implici ax a e on labo (ITR L ) de e mined in gene al e ms (2), •da a on poli ical o ien a ion and elec ion esul s we e ob ained om he po al Volby ope a ed by he Czech S a is ical O ice (Volby, 2022). In he Czech Republic he employe ’s pay oll cos s consis o g oss wages and social secu i y con ibu ions. A e age g oss wages in he analysed pe iod a e ob ained om he da abase o he Czech S a is ical O ice (Czech S a is ical O ice, 2020). Social secu i y con ibu ions a e cal- cula ed in acco dance wi h he legisla ion go e ning his insu ance. The o e all pe sonal ax a e is de ined as he a e o pe sonal income ax and social secu i y con ibu ions as a pe cen age o g oss wages. M. K ajňák, K. K zikallo á and V. F ied ich Jou nal o Policy Modeling 44 (2022) 1219–1231 1222 4. Resea ch me hodology In o de o analyse he da a men ioned in he p e ious chap e , we speci y he me hodology used o conduc he analysis. Fi s ly, we de ine in gene al he me hod o calcula ing he pe sonal ax a e. Subsequen ly, we o malize me hods o assessing he ela ionship be ween selec ed indica o s o he magic quad angle, o malized ax bu den indica o s and poli ical o ien a ion. 4.1. Tax bu den on labo indica o s The e ec i e ax a e E TR is calcula ed acco ding o he o mula (1), =ETR IT Y 100% (1) whe e IT is pe sonal income ax, and Yis o al g oss sala y. The implici ax a e on labo ITR L is de e mined acco ding o he o mula (2), =ITR LT LC 100% L (2) Table 1 The poli ical o ien a ion in he Czech Republic. Yea O ien a ion P ime Minis e P edominance 1993 igh Václa Klaus (ODS) 0.25 1994 igh Václa Klaus (ODS) 0.25 1995 igh Václa Klaus (ODS) 0.25 1996 igh Václa Klaus (ODS) 0.08 1997 igh Václa Klaus (ODS) 0.08 1998 le Jose Tošo ský (non-pa y) -0.08 1999 le Miloš Zeman (ČSSD) -0.08 2000 le Miloš Zeman (ČSSD) -0.08 2001 le Miloš Zeman (ČSSD) -0.08 2002 le Vladimí Špidla (ČSSD) -0.23 2003 le Vladimí Špidla (ČSSD) -0.23 2004 le S anisla G oss (ČSSD) -0.23 2005 le Jiří Pa oubek (ČSSD) -0.23 2006 le Mi ek Topolánek (ODS) -0.09 2007 le Mi ek Topolánek (ODS) -0.09 2008 le Mi ek Topolánek (ODS) -0.09 2009 le Jan Fische (non-pa y) -0.09 2010 igh Pe Nečas (ODS) 0.06 2011 igh Pe Nečas (ODS) 0.06 2012 igh Pe Nečas (ODS) 0.06 2013 le Jiří Rusnok (non-pa y) -0.14 2014 le Bohusla Sobo ka (ČSSD) -0.14 2015 le Bohusla Sobo ka (ČSSD) -0.14 2016 le Bohusla Sobo ka (ČSSD) -0.14 2017 cen e And ej Babiš (ANO) 0.12 2018 cen e And ej Babiš (ANO) 0.12 2019 cen e And ej Babiš (ANO) 0.12 2020 cen e And ej Babiš (ANO) 0.12 Sou ce: own calcula ions. M. K ajňák, K. K zikallo á and V. F ied ich Jou nal o Policy Modeling 44 (2022) 1219–1231 1223 whe e LT ep esen s labo axes, and LC labo cos s (F ied ich e al., 2012). 4.2. Me hods Co ela ion analysis was used o e alua e he dependence o quan i a i e a iables. The Pea son co ela ion coe icien is a measu e o he s eng h o a linea associa ion be ween wo a iables, o example Xand Y. I is calcula ed using he o mula (3), = S S S XY X Y (3) whe e s XY is co a iance be ween Xand Y,s X is s anda d de ia ion o X, and s Y is s anda d de ia ion o Y. The o mula e u ns a alue be ween − 1 and 1, whe e = 1 indica es a maximal (linea ) posi i e ela ionship, and = −1 indica es a maximal nega i e ela ionship. A esul o = 0 indica es no ela ionship a all. I he absolu e alue o is highe han 0,5, he associa ion be ween Xand Yis conside ed s ong (Field, 2013). The s a is ical signi icance o he co ela ion coe icien is de e mined by - es . The es s a is ic ( alue) is calcula ed as (4), = n 1 2 2 (4) whe e nis he numbe o alues o a iables Xand Y. S a is ics has a S uden 's dis ibu ion wi h d =n- 2 deg ees o eedom (Pea son, 1931). Linea disc iminan analysis is a me hod o mul idimensional s a is ical classi ica ion. I is used o classi y a s a is ical uni in o one o he g oups based on he alues o se e al quan- i a i e a iables based on he simila i y o hei alues (Klecka e al., 1980). A es s a is ic called Wilks’s lambda is used o e alua e he di e ences in he alues o he a iables in he indi idual classes. I is calcula ed as (5), = + W W B Ade de ( ) (5) whe e Wis he ma ix o a iabili y wi hin classes and Bis he ma ix o a iabili y be ween classes. The alue o Wilks’s lambda is in he ange 0–1, whe e Λ= 0 ep esen s absolu e dis- c imina ion o objec s and Λ= 1 means ha he objec s canno be dis inguished based on he obse ed a iables. The ou pu o disc imina ion analysis can be exp essed using disc imina ion unc ions and sco es, which allows he p obabili y ha a gi en s a is ical uni belongs o a gi en class o be exp essed. Thus, o each uni , he sum o he p obabili ies is equal o 1 (E e i & Dunn, 2001). The g aphical ep esen a ion o he esul s o disc imina ion analysis a e biplo s called (canonical) disc iminan cha s (Lipko ich & Smi h, 2002). In hese g aphs, he indi idual uni s a e displayed in wo-dimensional space, wi h he dis ance be ween he uni s ep esen ing hei simila i y. Uni s belonging o he same g oup o m clus e s in he g aph. In he disc imina ion cha , bounda ies be ween indi idual g oups ep esen ed by lines and hal -lines can be c ea ed. Each g oup is hen ep esen ed by a gi en polygonal a ea. Such g aphs a e also called e i o ial maps. M. K ajňák, K. K zikallo á and V. F ied ich Jou nal o Policy Modeling 44 (2022) 1219–1231 1224 4.3. Poli ical da a To de e mine poli ical o ien a ion in he Czech Republic, membe s o he Chambe o Depu ies o he Pa liamen o he Czech Republic we e moni o ed acco ding o he poli ical pa ies and mo emen s hey belonged o and subsequen ly classi ied as le , cen e , o igh . Two a iables we e c ea ed o s a is ical analysis. The i s a iable was a nominal a iable wi h alues o le , cen e and igh ha de e mined he p e ailing poli ical o ien a ion in Pa liamen (modal alue). The second a iable Pis a quan i a i e a iable ha exp esses he p edominance o he le o igh poli ical wing in he Chambe . The alue o his a iable is calcula ed as (6), = + PL R N (6) whe e Pis p edominance, Lis numbe o le -o ien ed depu ies, Ris numbe o igh -o ien ed depu ies and Nis he numbe o membe s o he Chambe . The alue o P anges om − 1 (100% p edominance o he le wing) o + 1 (100% p e- dominance o he igh wing). I is a weigh ed a e age whe e le -wing membe s o he Pa liamen ha e a alue o − 1, cen e 0 and igh -wing + 1. The alues o bo h a iables o he pe iod 1993–2020, supplemen ed by he names and poli ical pa ies o he P ime Minis e s, a e gi en in Table 1. P edominance was calcula ed acco ding o (6). Since he membe s o he Chambe o Depu ies a e elec ed (wi h a ew excep ions) based on p opo ional ep esen a ion, he e is conco dance be ween pa liamen a y p edominance and he poli ical o ien a ion o he P ime Minis e (head o go e nmen ). In o he wo ds, he e is consis ency be ween he execu i e and he legisla u e. The excep ions a e he pe iod 2006–2008, when, al hough he Chambe o Depu ies was p edominan ly le o ien ed, he igh -wing go e nmen o Mi ek Topolánek was in powe , bu o mos o i s e m wi hou con idence; and he pe iod 2016–2020, when And ej Babiš's cen al-o ien ed go e nmen op- e a ed in a p edominan ly igh -wing Pa liamen . 5. Resul s and discussion In able 2, he selec ed cha ac e is ics o he analysed a iables a e lis ed i s . Fo each a iable, he minimum and maximum alue, he mean alue, median, and s anda d de ia ion is s a ed. 5.1. Resea ch esul s The in luence o poli ical o ien a ion in he Czech Republic on mac oeconomic indica o s o he magic quad angle (UNEM, GDP, INFL, and CA/GDP) and selec ed ax a es (ETR and ITR L ), was e alua ed by co ela ing hese indica o s wi h poli ical p edominance in he Chambe o Depu ies. The esul s a e shown in Table 3. The ax p og essi i y indica o s (ETR and ITR L ) a e no signi ican ly dependen on he p e ailing poli ical o ien a ion in he Chambe o Depu ies. O he magic quad angle indica o s, a s a is ically signi ican and s ong dependence was ound be ween he unemploymen a e (UNEM) and in la ion (INFL). M. K ajňák, K. K zikallo á and V. F ied ich Jou nal o Policy Modeling 44 (2022) 1219–1231 1225 As he co ela ion coe icien s show, in pe iods when he igh wing in Pa liamen is s onge , unemploymen in he Czech Republic is lowe and in la ion is highe ; in yea s when he poli ical le has a s onge in luence, highe unemploymen and lowe in la ion a e mo e likely. These seemingly su p ising esul s can ha e wo causes. Fi s ly, mac oeconomic indica o s end o ha e highe ine ia, eac ing o changes wi h a delay (some imes se e al yea s). I is he e o e no uncommon o go e nmen s o be c i icized o nega i e ou comes whose oo s need o be aced back o hei p edecesso s. Secondly, he poli ical scene in he Czech Republic (and his o ically in he Czech lands) ends o be mo e le -o ien ed. This means ha e en pa ies ha p esen hemsel es as igh - wing a e a he mo e cen e - igh and ha e many le -wing elemen s in hei mani es os. The excep ion is he ODS pa y led by Václa Klaus in he 1990 s, which s ongly espoused Reaganomics and Tha che ism. A p esen , such ‘ a igh ’ pa ies (as labeled by poli ical scien is s and jou nalis s) a e in he mino i y and ou side he poli ical mains eam. In addi ion, he poli ical mo emen ANO (o iginally ANO 2011) has a speci ic cha ac e in he Czech poli ical scene. I was ounded by businessman and mul imillionai e And ej Babiš as a cen is , ca ch-all p o es mo emen in opposi ion o he es ablished le and igh pa ies. ANO’s agenda ea u es elemen s o bo h le - and igh -wing poli ics so he mo emen has been willing o coope a e wi h o he pa ies ega dless o hei poli ical o ien a ion. I pa icipa ed in go e nmen om 2013 o 2021. In 2017 i won he elec ion and Babiš became P ime Minis e . Linea disc iminan analysis was used o e i y he s abili y o he pe cep ion o he poli ical le and igh in he Czech Republic. The p e iously-men ioned magic quad angle indica o s we e again used as inpu s and he s a e policy in he Czech Republic was e alua ed as le -wing, cen al, o igh -wing o each yea o he pe iod om 1993 o 2020. Wilks’s lambda eached a alue o 0.238 (p- alue < 0.001), indica ing ha he esul ing disc imina ion o uni s in o h ee g oups called le , cen e and igh is signi ican . Table 2 Desc ip i e s a is ics o indica o s o analysis. Va iable Minimum Maximum Mean Median S d. de ia ion Y 1 - ETR 8.64 14.00 11.04 11.08 1.38 Y 2 - ITR L 41.96 43.95 42.83 42.75 0.52 X 1 - UNEM 2.00 8.80 5.87 6.50 1.99 X 2 - GDP -4.80 6.85 2.65 2.68 2.60 X 3 - INFL 0.10 20.80 4.25 2.50 4.56 X 4 - CA/GDP -6.15 1.56 -2.25 -2.11 2.25 Sou ce: own calcula ions. Table 3 Co ela ion be ween economic indica o s and poli ical p edominance. Indica o Co ela ion p- alue UNEM -0.643 < 0.001 GDP -0.153 0.436 INFL 0.597 < 0.001 CA/GDP 0.307 0.112 ETR -0.124 0.538 ITR L -0.042 0.836 Sou ce: own calcula ions. M. K ajňák, K. K zikallo á and V. F ied ich Jou nal o Policy Modeling 44 (2022) 1219–1231 1226 The esul s o he disc iminan analysis a e shown in Table 4. I u ns ou ha in mos yea s he go e nmen 's economic policy, as exp essed by mac o- economic indica o s (las column in Table 4), coincides wi h he p e ailing poli ical o ien a ion o he Chambe (column 2). O e he en i e 1993–2020 s udy pe iod he e a e only wo pe iods when he e is signi ican de ia ion om his end. The i s o hese is 2007–2008 when he igh -wing go e nmen o Mi ek Topolánek uled wi hou con idence, despi e a le -wing majo i y in Pa liamen . As he disc imina o y analysis shows, his pe iod ne e heless displays he cha ac e is ics o a igh -wing go e nmen . This go e nmen in oduced he la ax in he Czech Republic. Paulus and Peichl (2009) ha e poin ed ou he success o la ax implemen a ion in Eas e n Eu ope, and Magnani and Piccoli (2020) documen he posi i e e ec s o income ax e o m in F ance s emming om a shi om p og essi e axa ion and exis ing bene i s o uni e sal basic income scheme wi h a la ax. On he o he hand, he esul s o a s udy made in Russia by Duncan (2014) show ha in de eloping economies, whe e ax e asion is widesp ead, his kind o e o m is ailing. Secondly, in he yea s 2010–2012, he igh -wing go e nmen o P ime Minis e Pe Nečas had he suppo o Pa liamen , in which he e was a sligh igh -wing dominance. Ne e heless, Table 4 The disc iminan analysis esul s. Yea O ien a ion P obabili y Resul Le Cen e Righ 1993 igh 0.07 0.00 0.93 igh 1994 igh 0.11 0.00 0.89 igh 1995 igh 0.09 0.00 0.91 igh 1996 igh 0.10 0.00 0.90 igh 1997 igh 0.18 0.00 0.82 igh 1998 le 0.45 0.00 0.55 igh 1999 le 0.82 0.00 0.18 le 2000 le 0.84 0.00 0.16 le 2001 le 0.77 0.00 0.23 le 2002 le 0.71 0.00 0.29 le 2003 le 0.82 0.00 0.18 le 2004 le 0.90 0.00 0.10 le 2005 le 0.89 0.00 0.11 le 2006 le 0.60 0.00 0.40 le 2007 le 0.33 0.00 0.67 igh 2008 le 0.26 0.02 0.72 igh 2009 le 0.71 0.00 0.29 le 2010 igh 0.81 0.00 0.18 le 2011 igh 0.80 0.00 0.20 le 2012 igh 0.82 0.00 0.18 le 2013 le 0.82 0.00 0.18 le 2014 le 0.71 0.01 0.28 le 2015 le 0.44 0.23 0.33 le 2016 le 0.09 0.77 0.14 cen e 2017 cen e 0.00 0.99 0.01 cen e 2018 cen e 0.00 1,00 0.00 cen e 2019 cen e 0.00 1,00 0.00 cen e 2020 cen e 0.00 1,00 0.00 cen e Sou ce: own calcula ions. M. K ajňák, K. K zikallo á and V. F ied ich Jou nal o Policy Modeling 44 (2022) 1219–1231 1227