Fial’s government wants to manage a deficit of 252 billion crowns next year. The shortfall is also due to military expenses and pensions, which must grow by law in line with inflation. In the end, there will also be a slight increase in spending on education, where originally there was a threat of cuts.
“This is only the draft budget that goes to the Chamber of Deputies. Everything before was just working materials,” said Prime Minister Petr Fiala (ODS) in the evening after the government meeting.
Savings will be made to subsidize electricity prices and salaries of civil servants, and the entire consolidation package of cuts and tax changes introduced in the spring is part of the budget. It advanced to the final third reading in the House of Representatives, but was successfully blocked by the opposition. Debate on it began on Friday, continued on Wednesday ahead of the budget debate and may drag on due to the opposition’s right to meet parliamentary deadlines. “We always veto meetings after 2 p.m.,” said Alena Schillerová, head of ANO deputies.
The budget deficit remains well above the pre-pandemic level, but it is decreasing compared to this year and previous years. The main reason is the end of energy subsidies. From January, on the one hand, the ceilings on electricity and gas prices will end, but a larger portion of the fees for solar power plants and distributors will also be transferred from the state to customers. The state helped with these regulated payments this year, but for next year it is reducing the aid to 9.35 billion, which is only a fraction of this year’s level.
“Taxpayers cannot afford higher expenses on energy prices. We have chosen other priorities,” said Minister of Finance Zbyněk Stanjura (ODS) regarding the chosen course of action, saying that the price of electricity and gas itself is falling again due to competition from traders and should roughly offset the growth of regulated items.
Expenditure in education will rise from 265 to 269 billion. The increase is supposed to cover the promised increase in teachers’ salaries to 130 percent of the average salary, but there remains a savings catch in the calculation. It will not be based on the national average wage next year or this year, but on last year’s average of 38,911 crowns. The budget will save on this thanks to inflation, and the teachers will improve only minimally compared to the current situation. In addition, the incomes of non-teaching staff are at risk. Details of how to fit into the budget will be presented by the Ministry of Education next week.
Big changes next year concern taxes – if the government succeeds in pushing the consolidation package through the House of Representatives, without which the planned budget would fall apart. Among other things, the package foresees a slight increase in insurance deductions from wages, higher property taxes or a rise in the price of cigarettes as a result of a further increase in consumption tax.
According to the latest updates, immigrants are also supposed to help save the budget. According to Stanjura, the government has increased the estimate of income from taxes and insurance premiums by six billion crowns against the original plan, the majority of which is to be provided by Ukrainians fleeing the war and also by a new, more benevolent labor migration regime. In total, 40,000 new taxpayers are expected to come from abroad in this way next year.