The Czech government has announced plans to reduce the state budget deficit by CZK 94 billion this year. Prime Minister Petr Fiala said that if measures were not taken now, the deficit would be CZK 148 billion higher in two years’ time. To achieve this, the government is proposing to reduce non-investment subsidies, operating costs and wages, as well as introducing two VAT rates instead of three.
In addition, levies on alcohol and tobacco will be raised, while food, housing and medicines will be made cheaper. Property tax is also to be increased, with the higher rate bringing an extra CZK 9.3 billion into the state coffers.
The pension system is also to be reformed, with adjustments to calculating retirement age, changes in pension levels and adjustments to early retirement. The prime minister said that while some taxes would be raised, the impact on citizens would be minimized.