The Czech parliament’s lower house has approved a series of measures proposed by the government to control the rapidly expanding budget deficit. These measures include increased taxes on beer and medicine, as well as higher corporate taxes. In the 200-seat house, the plan received support from 108 MPs from the ruling coalition, while 86 opposition members voted against it.
Prime Minister Petr Fiala, who introduced the package in May, stated that the proposed cuts, tax increases, and austerity measures are necessary due to the threatening pace of debt rise. According to Fiala, these measures should reduce the budget deficit by 97 billion Czech crowns (€3.9 billion) next year and by 150 billion in 2025. Consequently, the deficit, which is expected to be 3.5% of the GDP this year, should drop to 1.8% next year and to 1.2% in 2025.
The package still requires approval from the upper house, the Senate, where the coalition government has a majority, and presidential approval before becoming effective next year.
Key changes include an increase in corporation tax by two points to 21%, higher property tax for individuals, and increased taxes on alcohol, tobacco, and betting. The value-added tax will have two rates, 12% and 21%, instead of the current three rates. Medicines will move from the 10% rate to 12%, and people will pay 21% VAT on beer in bars.
The package represents a compromise reached by Fiala’s five-party ruling coalition, which took over after defeating populist Prime Minister Andrej Babiš and his centrist ANO movement in the 2021 parliamentary election.
For more details, you can read the original article on Euronews.