Minister of Finance Zbyněk Stanjura.
Prague – Finance Minister Zbyněk Stanjura (ODS) does not expect to request an increase in this year's budget. In the Czech TV program Otázky Václav Moravec, he stated that the budget is robust enough that it can also accommodate the eventual valorization of pensions, if the coalition fails with its proposal to reduce it. The House of Representatives will discuss the disputed proposal in the coming week.
This year, the state plans to run a deficit of 295 billion crowns. Stanjura stated that the budget is large in volume and he does not yet see a reason to amend it. His predecessor, the current head of the ANO opposition parliamentary club, Alena Schillerová, expects that the government will eventually have to increase this year's budget.
At the beginning of the year, Stanjura stated that he had no signals that the planned budget would not be met. According to him, we cannot expect a similar external shock as the Russian invasion of Ukraine last year. He also stated at the time that the budget should be able to cope with the likely extraordinary valuation of pensions due to high inflation, which, according to economists' estimates, would mean additional expenses of 20 billion crowns. According to him, the change in the government's attitude to the amount of valorization was only brought about by the data published on February 10 about the amount of inflation by which, according to the law, pensions should be increased.
Due to inflation, pensions are to be exceptionally valued from June. According to the documents for the proposal, according to the current rules, the merit percentage part of the pension would increase by 11.5 percent, the average old-age pension would increase by 1,770 crowns. The government proposes to limit the one-time addition and increase the merit component by 2.3 percent and by 400 crowns, the average retirement pension would increase by 760 crowns. Indebtedness would be reduced by 19 billion crowns. Instead of 34.4 billion in additional debt, 15.4 billion CZK would be paid.
Last year, the state economy ended with a deficit of 360.4 billion crowns, which is the third largest deficit after 2021 and 2020. The deficit was also reflected in the deepening of the state debt to 2.895 trillion crowns, when at the end of 2021 it was 2.466 trillion crowns. The government originally planned a deficit of 280 billion crowns for last year, but in the fall it amended the State Budget Act and the deficit was supposed to amount to 375 billion crowns. According to Stanjura, the amendment was necessitated by unexpected expenses, in particular 27 billion crowns for extraordinary pension valorizations, 17.4 billion crowns for a cost-saving energy tariff for households or 10.9 billion for increased social benefits.
At the same time against 2021 last year budget revenues increased by 9.2 percent to 1.624 trillion crowns. Their growth was mainly due to higher collection of VAT and corporate income tax. Expenditures increased by 4.1 percent year-on-year to 1.984 trillion crowns.
According to Deloitte analyst Václav Franče, the main risk of the budget for this year lies in the fact that the state will not collect as much as it had planned from extraordinary taxes imposed on banks, energy and refineries. On the other hand, developments in the energy markets are relatively favorable for the government for the time being, so spending on solving the energy crisis would not have to be so high, ČTK previously reported.
According to the minister, the savings in the budget should mostly concern expenses
Savings of 70 billion crowns in next year's budget should cover two-thirds of expenses and one-third, i.e. roughly twenty billion crowns, the revenue side, Stanjura said in Václav Moravec's Questions. According to him, in order for the changes to be sustainable, they should be consulted with the opposition. First, however, there must be agreement on them in the coalition, he added. For example, he is preparing to change the taxation of gambling so that the state budget will receive an additional billion units. On the other hand, the government will probably abandon the proposal to tax so-called still (non-sparkling) wine.
Stanjura said that annually the state collects around nine billion kroner from gambling, and by changing the taxation it will be possible to obtain units of billions. Addictologists have divided games for this purpose into three groups according to their danger and degree of addiction. Based on this basis, the Ministry has prepared calculations of changes so that they are positive in the collection of taxes.
Currently in the Czech Republic there is zero consumption tax on still wine. Thoughts on the introduction of the tax always appear in connection with the tight state budget. Stanjura mentioned that the wine tax is used by a minority of EU countries, according to him, the fact that if it were low, as for example in France, it would not be worthwhile for the state due to the administration costs speaks against its introduction.
Czech Republic in recent years, it has been dealing with a large structural imbalance of the state budget. Last year, the state budget ended with a deficit of 360.4 billion crowns, which was the third worst economic result after 2021 and 2020. The approved deficit for this year is 295 billion crowns. According to the forecast of the Ministry of Finance, the debt level of the Czech Republic will probably reach 45.8 percent of GDP this year, which is the highest level ever.