The Czech President approves a plan to reduce the budget and taxes. Trade unions call for protests
PRAGUE (AP) — Czech President Petr Pavel on Wednesday signed an economic package of dozens of measures into law – Introducing budget cuts and increasing taxes It aims to keep the ballooning budget deficit under control.
Pavel’s signature was the last step before the government’s proposal – which had previously been approved Parliament – It was passed into law that would make Czechs pay more taxes on alcoholic beverages, in a country famous for its beer and medicines. Companies will also pay higher corporate taxes.
Prime Minister Peter Fiala previously said the austerity measures were necessary because debt was rising at a “dangerous” pace.
Pavel said the current situation is unsustainable.
According to the government, these measures should reduce the budget deficit by 97 billion Czech crowns ($4.3 billion) next year, and by 2025 by 150 billion Czech crowns ($6.7 billion).
As a result, this year’s projected deficit of 3.5% of GDP should fall to 1.8% next year and to 1.2% in 2025.
Corporation tax will rise by two points to 21%, while property tax for individuals will also be increased, as well as tax on alcohol, tobacco and betting.
The VAT will have two rates, 12% and 21%, instead of the current three rates – 10%, 15% and 21%.
Medicines will move from a 10% rate to 12%, while people will pay 21% VAT on their favorite beer in pubs.
The package is a compromise reached by Fiala’s five-party ruling coalition, which took power after defeating populist Prime Minister Andrej Babis and his centrist Ano movement in the 2021 parliamentary elections.
The opposition condemned the changes and said it intended to take the matter to the Constitutional Court, the country’s highest judicial authority, while trade unions called for a day of protests and strikes on Monday.
