Speculation about the government’s impending reforms to public finance has not abated even before they are announced. So far, the latest news is that the Cabinet apparently did not count on the fact that they had to “find” 70 billion, but 120 billion. Of this, 70 billion should be savings in costs and the remaining 50 billion should be on the income side. If the government really wanted to collect that much annually, it would mean collecting thousands more from citizens through a combination of different taxes. However, coalition politicians warn that the total amount to improve the budget could be much higher.
About a variation of 120 billion she informed Czech Television. Expenses will be reduced by 70 billion and income will be increased by 50 billion. I think the ratio of 50 to 70 is reasonable and they are moving towards this negotiation,” said Minister of Science and Research Helena Langsatlova (TOP 09).
If this is true and there is a budget of about 50 billion between the citizens of the Czech Republic, the state will take from each of them. 4,800 crowns per annum In addition, that means about 400 crowns per month. However, it is not yet known which taxes will be increased and for whom. If the cabinet does nothing in the public finances, it will manage a budget of almost minus 300 billion every year in the future, which will have an unfortunate effect on the already recorded state debt. It was 2.895 trillion at the end of last year.
The finance ministry called the variance with 120 billion is just speculation. According to him, the total savings will be at least 70 billion. “At the same time, Minister Stantura said that this amount should be the lowest target of the government’s consolidation efforts and that he will strive for the biggest slowdown in borrowing since the previous government. In this spirit, the minister also approaches the intensive negotiations currently underway at the leadership level of the coalition parties,” the department’s press release said. said spokesman Thomas Weiss.
At least 140 billion, the parties want
At the same time, individual grand coalition parties hint that the resulting package could be even higher. “The situation with the public budgets is very serious and STAN has been saying from the beginning that the value of the integration should be higher. We are talking about a value of 140 to 150 billion. Primarily, it is necessary to look for savings, but we say that it is not enough without you making significant cuts in education and defense forces. ,” Lukáš Vlček, First Deputy Chairman of the Starost, told Echo24.
TOP 09 boss Markéta Pekarová Adamová sees the situation similarly. According to her, the total savings is 140 billion. “At the same time, our condition is to save more on expenses than to withdraw income. The state should start by itself and reduce expenses, including subsidies,” says the Speaker of the Chamber.
Where to cross and where to pick up
According to Roklen Chief Economist Pavel Peterka, 70 billion in cuts and 50 billion in tax revenue increases are realistic. “When looking for cuts on the spending side, the three biggest expenditure items of the state can come up, among others: pensions, health and the education system. As for the pension system, I support the proposal to change the parameters of the pension system, primarily to consider real wage growth,” he said.
According to him, in the education and health sector, redundancies should be taken into account, which will save on salary costs. “Repealing state support for savings and supplementary pension insurance and returning the fee waiver to the state before 2018 is the low-hanging fruit in the area of spending cuts,” he says.
For income, according to Peterka, it is better to look at VAT rates and move most items to the standard rate. Additional funds may be brought in through an increase in consumption tax, for example on alcohol or the introduction of a new one.
“On top of that, there is a discount for a non-working wife or husband, which will immediately bring about five billion in income. In addition, such a discount prevents people from entering the labor market,” the economist calculates, and the state can also earn money by selling some assets.
Negotiations are coming to an end
According to Finance Minister Zbyňek Stanjura (ODS), the views of the Allies regarding the integration package are gradually converging and the agreement is close at the right time. According to him, the cabinet intends to present both the consolidation package and the pension reform by mid-May.
“Negotiations have progressed. It is true that nothing is agreed until everything is agreed. Concepts are gradually coming together,” Stanjura said. “There are subcontracts, but many subcontracts relate to what the overall contract will be. Anything has approval, anything has conditional approval,” he added. According to him, the result will be a consensus proposal by the government coalition, which will be supported by all ministers, coalition MPs and senators, he added.
According to Stanjura, while savings were acknowledged on the expenditure side, measures on income were not. “It’s relative. We’re emphasizing savings, and that’s where we want the numbers to be higher,” he said.