Prague – The Senate Constitutional and Legal Committee recommended approving the government’s consolidation package without changes. It was decided today by the votes of five of the seven members present. The remaining two senate committees, which dealt with the package today, did not accept the same recommendations by a relatively narrow majority due to efforts to partially modify it. The Senate will decide on the package in a week, Prime Minister Petr Fiala (ODS) and Minister of Agriculture Marek Výborný (KDU-ČSL) believe in its acceptance by the upper parliamentary chamber.
The Senate economic committee could not even agree on any modifications to the package, unlike the public administration committee, which wants to adjust the share of local governments in the budgetary allocation of taxes, which Michael Canov (SLK) tried unsuccessfully for in the constitutional-legal committee. The Public Administration Committee also wants to maintain the exemption of gas intended for use in metallurgy from the natural gas tax, in order to ensure the competitiveness of glass and steel plants. According to the Minister of Finance Zbyňek Stanjura (ODS), this exception represents 300 million crowns per year.
The Economic Committee agreed on only three of the seven recommendations to the government proposed by its chairman, Miroslav Plevný (STAN). According to him, the Senate should call on the ministries to consider changes to the taxation of employee benefits and the revision of the tax treatment of the meal allowance when preparing further amendments. Ministries should also consider protecting energy-intensive industries in the form of tax breaks and potential remedial measures for contract workers. In the constitutional and legal committee, senator Jitka Chalánková from the ODS and TOP 09 clubs did not prevail with the recommendation that the government should submit a new legislative amendment that would “take into account the role of the family in respecting the different roles of spouses” not only in the tax area.
From the package, which changes to 65 laws, the government promises to consolidate public finances and reduce the structural deficit of the state budget. In the next two years, it is to be improved by approximately 150 billion crowns. Part of the money and savings is to be brought by the package, the rest is represented by cuts in the powers of the government.
The package introduces only two rates of value added tax, namely 12 and 21 percent. The lower rate will mainly include food including tap water, some services or perhaps draft beer will be moved to the higher rate. Books will be exempt from VAT. The corporate tax rate is to be increased from 19 to 21 percent. In the next two years, the consumption tax on alcohol will increase by ten percent, and in the following year by five percent. The package reintroduces a levy on employee health insurance at 0.6 percent of income. It cancels some tax exemptions, such as the discount for school fees or for students. It limits the discount to a wife or husband without their own income, so that they will have to take care of a child up to three years of age.
The maximum amount of state support for building savings will be reduced from 2,000 to 1,000 crowns. The price of the annual highway stamp will increase from 1,500 to 2,300 crowns starting next March 1, and will increase according to inflation from 2025. The possibility of a one-day stamp will be newly introduced. Most of the changes are due to take effect from the beginning of next year.
CR, taxes, economy, senate, budget, FLEŠ committees
