If recent pledges by politicians are any indication, businessmen in this country should be looking forward to the next few months. Apart from various investment incentives available to domestic companies, politicians promised to significantly decrease companies' tax burdens. Given the ongoing political crisis since June's general election, many of the promises have yet to materialize. Martin Sochor, director of the Apogeo financial consultancy firm, offers The Prague Post his opinion about which pledges were realistic, which weren't and how the government should further proceed with its fiscal policies.

Pre-election campaigning brought about many promises of subsidies and tax cuts for businesses. Can local businesses benefit in any way from the current political impasse?

Businesses cannot profit from this political tension. In fact, it is really harming them. As far as the subsidies or tax advantages are concerned, I would recommend not to rely on them and to turn to specialized financial companies for their standard products.

Politicians have been promising to cut taxes and introduce other relief despite the high level of mandatory expenses that prevents them from reducing state budget expenditures. Do you believe tax cuts are possible in such a situation?

Reducing the tax burden could be done by a government with a strong mandate, but the question of whether it is possible in the current situation still exists. Personally, I suppose any major tax cut is unlikely at the moment.

Judging from the companies' point of view, to what extent is tax reform needed?

I believe tax reform is crucial. When not looking at how much and what is being taxed, most companies would certainly welcome simplifying the calculation of particular taxes. I would especially like to point out the income tax law, which is quite complicated and not very comprehensive.

The stalemate in Parliament virtually rules out that any major reforms can be implemented at this time. However, if you could prioritize the reforms you would like to see, what would they be?

I see taxes as the decisive source of income for the state budget. Given the current state of public finance, I don't see turning to a flat tax and the related decrease of taxation as realistic. Personally, I'd focus on reforming state budget expenditures and mandatory expenditures in particular.

There has been hot debate recently over how the country draws money from European Union funds, especially in light of recent corruption allegations. Do you believe it is possible to root out corruption when administering so much money?

Corruption cannot be fully rooted out, but it can be significantly reduced if all controlling procedures are adequately set. Corruption in this field could be reduced by simplifying the verification procedures related to granting EU subsidies, and also by clearly spelling out the criteria that need to be met so that applications can be approved.

Your company advises on how to draw EU money. The state was recently criticized for how inefficiently it drew that money. What is the problem?

As far as I've been informed, the country will spend the allocated money in most of the EU operational programs. The country is only drawing smaller amounts from the European Social Fund. So we have not swept away anything.

Shifting from the public sector to the private, what do you find is the most appropriate method for financing companies?

The issue of financing corporations is quite complicated, and there's no simple answer. There is no universally appropriate model because different projects often require different approaches. Setting a particular financing model depends on the structure of a company or a holding, and can lead to more effective financial management.

To what extent is risk capital used for financing in the Czech Republic? What are the criteria for projects to be eligible for funding via risk capital?

Risk capital is an appropriate method for financing startups and projects with the potential to grow internationally. Its use and availability depend on the business field. While risk capital often flows into the technology sector, it is not that common in developers' projects. Generally speaking, risk investors tend to follow several basic principles: the business field and its growing potential, how lucrative a particular project is and the professional experience and management skills of its recipient.

Most Czech companies tend to use bank loans to finance their operations, and they rarely turn to any alternative source such as the stock exchange. Do you think that the future existence of the stock exchange is justified?

Securing the sources for development on capital markets is a hot issue nowadays. Stock exchange representatives repeatedly express their interest in seeing new IPOs, and banking analysts predict that new stocks would boost the trading. However, many Czech companies that plan expansion and need financial sources are not big enough to go through the martyrdom of preparations for entering the stock exchange. This is where we can see a major difference between the Czech and U.S. markets. Technical and financial requirements for firms planning an IPO in the United States are friendlier to midsize companies. Nevertheless, I'm convinced that a few interesting stocks will appear on our stock exchange in the years to come.

Finally, let me ask a more speculative question. Why do so many people still tend to think that one can acquire wealth only through cheating and unfair business practices?