Czech government reveals plans to cut state budget deficit

The Czech government has revealed its plans to reduce the state budget deficit by CZK 94 billion this year. At Thursday’s event timed to start at 11:55 – signifying the lateness of the move – Prime Minister Petr Fiala said if measures were not taken now, the budget deficit would be CZK 148 billion higher in two years’ time.

Reducing non-investment subsidies is intended to save the state CZK 46 billion, while reducing operating costs and wages should save over CZK 20 billion, Mr. Fiala said.

The government is also proposing that there should be two VAT rates, rather than the current three, and wants to raise levies on alcohol and tobacco.

By contrast it plans to make food, housing and medicines cheaper.

Mr. Fiala said some taxes would be raised but the impact on citizens would be minimized. Twenty-two tax exemptions will be abolished while the tax system should be streamlined.

The government also introduced changes to the old-age pension system. The prime minister said the pension reform consisted of adjustments to calculating retirement age, changes in pension levels and adjustments to early retirement.

Property tax is to be increased, the minister of finance, Zbyněk Stanjura, said on Thursday. The higher rate should bring an extra CZK 9.3 billion into the state coffers, he said.