Czech crowns of various denominations in a cash drawer1

Finance Minister Strikes Optimistic Tone Ahead of Parliamentary Debate On Austerity Package

The proposed measures are intended to reduce the state budget deficit by CZK 97.7 billion. Credit: Freepik.

Prague, July 11 (CTK) – Finance Minister Zbynek Stanjura (ODS) said he believed the government’s consolidation package would gain support in both houses of the Czech parliament, speaking at a press conference before the Chamber of Deputies began debating the package of measures today.

The legislation will still be discussed by the five-member coalition, but if all the government parties agree on the amendments, they will be adopted, he said. He also admitted changes were possible based on the opposition’s proposals.

“We will have consultations between the second and third round, there is no reason not to support them,” he said. The most important thing that will not be changed, he said, is the total amount of planned savings.

According to the head of the Chamber of Deputies budgetary committee, Josef Bernard (STAN), the set of measures is a response to the unsustainable state of the public finances.

Stanjura and other representatives of the ruling coalition acknowledged that some taxes will increase if the package of measures is approved, but Stanjura said two-thirds of the savings are from state spending, in the form of savings on operational costs, salaries, and government subsidies.

Representatives of the junior government Christian Democrats (KDU-CSL) and Pirates noted at the press conference that their priorities were included in the package. For the Christian Democrats, this was support for families, and in the case of the Pirates, support for employees.

Next year, the proposed measures should reduce the state budget deficit by CZK 97.7 billion. Together, they are expected to raise CZK 150.7 billion over next year and the following year. It is expected that the government’s proposals will undergo some changes in the Chamber of Deputies, as agreed by the coalition.

The opposition ANO claims that the package will damage the economy and slow growth, and therefore intends to oppose the passage of the draft. Alena Schillerova, the chair of the ANO parliamentary group, said the consolidation package is far worse than the one presented by the government in May and contains a number of illogical measures.

The government’s consolidation package is to be discussed by MPs in the initial round at today’s extraordinary session called at the initiative of the coalition. The opposition has announced a long meeting, and filibustering is not ruled out.

Schillerova said the package had not been sufficiently discussed with representatives of employers and employees. “It is far worse than what the government presented at the press conference in May. There are things there that are not related to the tax package at all, such as the regulation of gambling,” she noted. 

The coalition, she said, is not paying enough attention to savings on the state spending side.

“The complexity of the negotiations (in the lower house) will correspond to the fact that the tax package on the table means the highest tax increase in the country’s modern history,” said Schillerova. She criticised the fact that the Finance Ministry had dismissed around 230 major comments, which she described as the arrogance of power.

In the current situation, she said the package constituted “a toxic cocktail for the Czech economy.” Schillerova said the government should focus more on the use of EU funds and effective tax collection. “The aim is to convince MPs to reject the package as a whole,” she said. If that fails, ANO wants to correct the biggest errors and illogical parts in the material, she added.

The opposition’s proposals would burden the state treasury with an additional CZK 700 billion of costs, said Jakub Michalek, chairman of the Pirates parliamentary group.

Michalek said the aim was to get more people into the labour market, which could bring up to CZK 25 billion to the budget. He specifically mentioned helping people in debt, employing former prisoners and helping them return to the economy, and setting conditions for mothers on parental leave to enable them to return to their careers if they wish.

Michalek said work is also needed to improve tax collection. In his view, the solution is not to reintroduce electronic sales registration (EET), but to strengthen the capacity and activities of the relevant authorities. The Pirates have asked the Ministry of Finance to strengthen the specialised tax office. Michalek said it is also important to reduce the cost of debt servicing.

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