Prague – The Senate today approved the government’s consolidation package, which is intended to help the government improve the state budget in the next two years by a total of up to 150 billion crowns. The set of mainly tax changes will now be signed by President Petr Pavel. If he wants to veto the package, he has 15 days to do so. The President had previously welcomed the government’s efforts to consolidate public finances. At the end of October, responding to a call by SPD opposition leader Tomio Okamura to veto the package, the president said he would thoroughly consider all aspects of the legislative process and then communicate his final decision to the public. 53 of the 74 senators present voted to approve the package. 38 votes were needed.
Since the Senate approved the bill, it did not vote on the rejection motion raised by the ANO club and SOCDEM, nor on the amendment proposals. Senators debated the bill for about seven hours today. 32 senators spoke. A number of them had reservations about the draft and some suggested modifications.
Some senators criticized the changes in the budgetary allocation of taxes to municipalities and regions. They did not like that their share was to be reduced. The debate also touched on the taxation of still wine. For example, the chairman of the senatorial club SEN 21 and Pirátů Václav Láska proposed taxing still wine for large wine companies, the Mikulov senator Rostislav Koštial (ODS and TOP 09) called it a “crotchet”. The tax package does not include still wine.
There were also proposals to reassign some items to a lower rate of value added tax. For example, the pirate senator Adéla Šípová wanted to include menstrual aids and baby water in the lower rate, and she wanted to replace the revenue by taxing still wine.
Finance Minister Zbyněk Stanjura (ODS) declared that he is sure that the effects of the package will not be as dramatic as the authors of the dark scenarios judge. According to him, the Czech economy is much more resilient than it looks. He also pointed out that in the country there are the smallest differences between the rich and the poor and the least number of young people at risk of poverty, and unemployment in the country has been exceptionally low for a long time. As before in the House, he said that the state needs to consolidate public finances, which are not in good shape. “I see this bill as a bold step and a very valuable compromise,” he said. “I am convinced that the bill is balanced,” he added.
He also denied that the package contained so-called stickers, that is, changes to unrelated laws. For example, Hana Kordová Marvanová (bezp., elected for KDU+ODS+TOP 09) was bothered by the fact that the package also interferes with the Act on Public Research Institutions, and this change only got into it in the House of Representatives.
The package changes to six dozen laws and mainly brings tax changes. For example, it introduces only two rates of value added tax, namely 12 and 21 percent. Food will mainly be at a lower rate, some services or draft beer will be moved to a higher rate. The corporate tax rate increases from 19 to 21 percent. The property tax will increase by an average of 1.8 times. In the next two years, the consumption tax on alcohol will increase by ten percent, and in the following year by five percent.
The Senate, on the proposal of the chairman of the Senate Economic Committee, Miroslav Plevný (STAN), adopted an accompanying resolution in which it appreciates the government’s efforts to stop the deepening of budget deficits and considers the consolidation of public budgets a necessary step. At the same time, he called on the ministries to consider the restoration of tax breaks for employee health benefits in the future and to revise the adjustment of the meal allowance.
The Senate also recommended to the ministries the protection of energy-intensive industries, possible corrective measures for work execution agreements and a possible reduction of the tax rate for bottled mineral and infant water. The cabinet should also consider, at the suggestion of the People’s Party, not canceling the taxpayer tax discount for caregivers and the physically disabled. At the same time, he should consider relaxing the restrictions that the law places on less harmful alternatives to smoking tobacco products.
The President of the Senate, Miloš Vystrčil (ODS), informed the senators that he and Minister Stanjura agreed that all accompanying resolutions and amendments will be forwarded to him, regardless of whether they are adopted. Senators should then receive them back with the Ministry’s statement regarding their possible use.
CR Senate meeting OPENER