The Czech government presented on May 11, 2023, a consolidation package comprising 58 measures that are expected to have a positive impact on the state budget balance of CZK 147.5bn (GBP 5.5bn) in 2024-2025. The first interventions reducing the deficit by CZK 94.1bn are to take effect from January 1, 2024. The aim of the cabinet's consolidation efforts is to reduce the public deficit from 3.5% of GDP this year to 1.8% of GDP in 2024 and 1.2% of GDP in 2025. Among other things, corporate income tax will rise from 19% to 21%. Levies on the self-employed are also set to increase, so that after three years the threshold should be equal to the minimum wage. There will be only two VAT rates, 12 and 21%. The retirement age will be automatically changed on the basis of life expectancy. 22 tax exemptions are to be abolished.
As part of the consolidation budget package, the Czech government proposes to cut national subsidies, especially for entrepreneurs, by CZK 54.4bn over two years and by CZK 45.6bn next year. On the revenue side, total savings of CZK 69.2bn will be made between 2024 and 2025 through, among other things, an increase in excise duties on tobacco and alcohol (CZK 7.0bn), taxes on gambling (CZK 3.9bn), the reintroduction of sickness insurance for employees at 0.6% (CZK 13bn) and property tax (CZK 9.3bn).
Source: CIA News