Central bank governor critical of government’s proposal to lower income tax

The governor of the Czech National Bank Jiří Rusnok has criticized the governmwent’s decision to abolish the so-called “super gross” wage, thus lowering income tax for low and medium income groups.

Mr. Rusnok said on Czech Television that the tax reform, which will cost the state 74 billion crowns, is ill-timed and imprudent, adding that the government should instead focus on mitigating the imacts of the coronavirus crisis.

The proposal, approved on Friday,  would see income tax cut from the present 20 percent to 15 percent for low and medium income groups. People with an income of over 139,000 crowns a month would pay a 23 percent tax.

The government says the tax reform will encourage consumer spending and help rev up the economy post-coronavirus.

The super gross wage, which has been the base for calculating employee income tax since 2008, is the sum of an employee’s gross wage plus social and health insurance premiums.