Czech budget consolidation package to be presented soon

The government is expected to present a consolidation package in mid-May, which will focus on tax increases and savings on the state side amid the country’s high budget deficit.

Deputy Prime Minister and Minister of Labour and Social Affairs Marian Jurečka (Christian Democrats) expect that the coalition agreement on the consolidation package should be concluded by the end of the week.

The priority is to look for savings, he told reporters as he arrived at Wednesday’s government meeting, Czech News Agency informed. Coalition politicians discussed the measures on Tuesday evening and continued the next day. They plan to present the package around mid-May.

“We will negotiate as long as necessary, I expect that an agreement should be concluded by the end of the week,” Jurečka said. He considers it a priority to look for savings on the state’s side. If the government wants to tell citizens and companies that they will be affected by an increase in certain taxes, for example, it must be able to present clear savings and a slimming down of the state, he believes.

Jurečka continues to push for an increase in corporate income tax. The deputy prime minister said taxpayers had contributed to supporting companies during the coronavirus pandemic, but now the companies also need to express some degree of solidarity once the crisis is over.

Prime Minister Petr Fiala and Finance Minister Zbyněk Stanjura (both Civic Democrats) have previously said that the package should reduce the structural deficit, this year at around 120 billion Czech crowns (€5,1 billion) by about 70 billion Czech crowns (€3 billion). According to some economists and politicians, financial recovery should be faster.

Stanjura has previously said he would like to cut tens of billions of crowns in state subsidies. He has proposed merging two reduced VAT rates as well as shifting some items between the rates. According to the available information, several tax exemptions could be abolished.

According to Stanjura, the measures under discussion are based on the positions of the various coalition parties and on the recommendations of the National Economic Council of the Government (NERV).

(Ondřej Plevák | EURACTIV.cz)