After dozens of hours of debate, the MPs are heading for the approval of the government package. Voting will start at 11am, despite objections from the opposition that setting a fixed date is a “huge encroachment” on their rights.
“Everything has already been said,” explained the decision of the chairman of the ODS deputies, Marek Benda.
Lawmakers will first have to deal with eight dozen amendments. But they only have three chances to pass.
The main one – negotiated in the coalition – includes several changes in the original proposal. For example, tax incentives for employee benefits up to half the average salary (currently CZK 20,162 per year) will be maintained.
“The employee will continue to be able to draw, for example, allowances for trips, cultural or sports events, printed books and the like,” the Ministry of Finance said. The union lobbied for the matter.
Part of the changes is also when the state, as before, will not use the income from the real estate tax. Here he made a compromise with the municipalities – he will leave them the entire tax, but will adjust the coefficient within the budget determination of taxes and will take the requested approximately 10 billion from the already shared tax.
What does the consolidation package change?
- It will not be possible to apply a tax discount for school fees, a student discount or a union membership fee.
- It will only be possible to claim the discount for the wife if she is taking care of a child under three years of age.
- The setting of VAT rates is also changing. Instead of two reduced rates of 10 and 15 percent, one will be 12 percent. The package also moves some items to the base rate of 21 percent, such as hairdressing services, garbage collection, cut flowers. A special case will be books to which VAT will not be applied.
- Greater taxation of tobacco and alcohol, so-called still wine remains tax-free.
- State support for building savings will be reduced to 1,000 crowns per participant.
- Increase in the levy burden on the self-employed from 25% to 40% of the average wage. At the same time, it is proposed that self-employed persons pay insurance premiums of at least 55% instead of the current 50% of the tax base.
- Capping relief from levies for agreements to carry out work.
- Increase in the price of the highway stamp by 800 crowns from 1,500 to 2,300 crowns per year and its regular valorization.
- Tightening of the conditions for granting and paying unemployment benefits for repeated registrations at the Labor Office.
The third most discussed change within this amendment proposal is the transfer of newspapers from the 21 percent VAT rate to 12 percent. Even when the tax package was published, the government had to explain why magazines are taxed less than newspapers. Its representatives claimed that magazines are more scientific, but the category also includes purely lifestyle and entertainment periodicals.
The original form of the government package also included changes in the redistribution of gambling fees. The state should get 55 percent of gambling tax revenue instead of the originally proposed 35 percent. 22.5 percent will go to the municipalities according to the number of gaming machines allowed on their territory, and they will receive the same proportion according to the number of inhabitants.
The road to the agreement of the government coalition
Last but not least, the package also included the acceleration of the increase in tax on alcohol, or on the contrary, the slowing down of taxation on e-cigarettes and nicotine sachets, or small things such as exemption from income tax arising from beekeeping (up to 50 beehives), in the amount of CZK 1,000 to the bee colony.
What did not fit in, however, is a lower VAT on baby water or menstrual hygiene supplies.
Other changes that have a preliminary green light
The other two amendments are more subtle than the government’s.
The so-called Havránek’s amendment, named after its proponent Jiří Havránek from the ODS, for example, envisages an amendment to the Act on the Protection of Health from the Harmful Effects of Addictive Substances and the Act on the Regulation of Advertising. The essence is the prohibition of marketing actions in the sale of nicotine products.
The coalition is also in agreement on one of the opposition proposals, namely Zuzana Ožanová, MP for ANO. She proposes the digitalization of block fines not only for customs officers and police officers, as stated in the original proposal, but for all public administrations that work with this tool. The cabinet of Prime Minister Petr Fiala (ODS) “adopted” the matter, even though the MP herself announced in advance that she personally could not support the entire consolidation package even if her proposal was approved.
According to the government, the consolidation package should contribute to the reduction of budget deficits. According to her, it should help reduce the deficit by 97 billion crowns next year and by 150 billion crowns in total by 2025. It will reduce state budget expenditures by 78.4 billion crowns and, on the contrary, it is supposed to strengthen it by 72.3 billion crowns on the income side.