The government has approved an increase in this year’s state budget deficit from CZK 320 to CZK 500 billion. The proposal now takes into account the effects of tax changes in force since the beginning of the year. This was announced by the Minister of Finance Alena Schillerová (YES). The Minister will propose to approve the budget change in a state of legislative emergency. The House should discuss the proposal on Thursday.
According to the proposal, total budget revenues should be CZK 1.39 trillion this year and expenditures CZK 1.89 trillion. Revenues should thus be lower by CZK 102.7 billion compared to the approved budget and expenditures higher by CZK 77.3 billion.
“We are among the countries with the lowest debt and the best credit ratings. It is our duty to take advantage of this great position and continue with the massive support of the economy. Whether lowering taxes or through direct assistance programs, where only in February and March will pay CZK 40 billion,” said Schiller . According to today’s information from the Ministry of Finance, changes in taxes in the form of abolition of the super-gross wage, reduction of taxation, increase of the taxpayer’s discount by CZK 3,000 and a change in the budget allocation of taxes will lead to a decrease in budget revenue by CZK 89.5 billion .
According to the economists contacted, the proposed deficit of 500 billion crowns is unfounded. According to them, the current economic situation and the latest estimates of economic development would justify a deficit of around 400 billion crowns .
According to the chairwoman of the National Budget Council, Eva Zamrazilová, the adoption of the tax package at the end of last year proves even more irresponsible in connection with the increase in the budget deficit than it appeared at the end of last year, when the change was adopted. “Consolidation of public finances is now even more in sight,” she said.
Economists addressing deficit of CZK 500 billion to be unfounded. According to them, the current economic situation and the latest estimates of economic development would justify a deficit of around CZK 400 billion. They believe that, as last year, the Ministry of Finance is creating a reserve for a possible deterioration in development due to the pandemic.
“The amount of the proposed deficit is absurd. It is absolutely not in line with what we have learned about the economy since the original deficit was approved. The economy is in better shape than the ministry envisaged when drawing up the budget. To account for the December tax adjustments, assumed then, “said analyst Petr Barton from Natland. “I consider the proposal to increase the deficit to CZK 500 billion to be completely inadequate.
In the amendment to this year’s state budget, the Ministry of Finance expects a decrease in tax revenues by CZK 99.6 billion compared to the originally expected collection. The main part of this is the approved tax package, which will prepare the state budget by CZK 87.7 billion. On the contrary, budget revenues from social security contributions or emission allowances should increase. Total revenues will fall by CZK 102.7 billion compared to the original plan, while total expenditures are expected to increase by CZK 77.3 billion. This is stated in the proposal that the government submitted to the deputies.
The Ministry of Finance expects the highest drop in the collection of taxes in the budget for personal income tax, by almost CZK 76 billion. This will be influenced, for example, by the payment of a compensatory bonus, ie a contribution to entrepreneurs and other persons whose activities have been affected by anti-epidemic measures. The abolition of the super-gross wage will also have an impact on the selection , which should deprive all public budgets, not only the state budget, of 78.5 billion crowns . Revenues of the Ministry of Foreign Affairs should decrease by CZK 450 million due to a decrease in revenues from visa and consular activities. On the other hand, the revenues of the Ministry of Labor from social security premiums and contributions to the state employment policy are to increase by CZK 13.4 billion. According to the Ministry of Finance, the reason is the update of the macroeconomic forecast and the higher volume of revenues last year.
The Ministry of Finance increased the estimate of revenues of the Ministry of the Environment from the sale of emission allowances by CZK 3.5 billion . He justifies this mainly by the increase in their price. Revenues of the Ministry of Transport are decreasing by CZK 25 billion due to a decrease in revenues from the Facility program to support recovery and resilience. Revenues of the Civil Aviation Authority will also fall by CZK 43 million due to the difficult situation in air transport. The Ministry of Culture should receive added half a billion crowns for the operation of contributory organizations.
Expenditures of the Ministry of Health are to increase by CZK 8 billion. Of this, CZK 7 billion is for covid-19 vaccine orders. According to the Ministry of Finance , the amount originally set aside last year, which amounted to CZK 1.925 billion, is no longer enough. Expenditures on the Smart Quarantine project increase by CZK 400 million. Another CZK 600 million is intended to compensate for the tax liability of teaching hospitals, which the government decided to debt relief last year. Hospitals had to record this contribution in the income, which increased their profit and tax base.
Source: CTK and Patria-cz
