The government wants to prepare changes to the benefit system, it also mentions greater targeting of aid

The government wants to prepare changes to the benefit system, it also mentions greater targeting of aid

The government wants to prepare changes to the tax system, it also mentions sentences addressability of aid

Illustrative photo – Tripartite meeting, April 12, 2022, Government Office, Prague. Prime Minister Petr Fiala (left) and Minister of Agriculture Marian Jurečka.

Prague – The government wants to prepare conceptual changes in the social benefits system. He plans to target the aid “in appropriate cases”. It no longer counts on maintaining the current valorization formula for increasing pensions. It also cuts the promise to reduce social contributions to employers or to re-count the period of study in the right to a pension. This follows from the updated program statement, which the five-coalition cabinet approved today. The social chapter remains almost unchanged.

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“We will place even greater emphasis on the best possible targeting of social assistance. Our goal is to ensure that the stabilization of public finances does not worsen the situation of citizens who cannot do without state aid,” Prime Minister Petr Fiala (ODS) said at a press conference. According to him, the program statement is not about “fundamental revolutionary changes”, but rather about adjustments and clarification of terms.

The government wanted to adjust its program because of the effort to slow down the debt of the state and because of the effects of the war in Ukraine and the energy crisis. In the updated version, in cooperation with the National Economic Council of the Government (NERV) and the National Budget Council (NRR), it promises adjustments on both the income and expenditure side. Last year, NERV proposed to reduce the deficits by changing the valuation of pensions, canceling education allowance, limiting early pensions, shortening parental leave or reducing unemployment benefits. Apart from deleting the goal of “maintaining the existing valorization mechanism” of pensions, these recommendations did not appear in the statement.

The government replaced the words “budget savings” with the words “stabilization of public finances”. A plan to prepare conceptual changes to the benefits system was added to the social chapter. The Cabinet also added the sentence that “in appropriate cases, the state will place greater emphasis on targeted targeting of social assistance”.

According to Minister of Labor Marian Jurečka (KDU-ČSL), the benefit system should be revised this year. “Revise the social system this year so that the system really has no room for abuse. It's not primarily about looking for some financial savings – that's of course a secondary effect, but it's about people who can objectively work working,” he said Jurečka. Previous governments also promised to revise the benefit system. Their ministers also spoke about the abuse of subsidies. Experts on social issues deny that benefits are abused on a mass scale. They criticize the system settings.

Jurečka said that the commitment to “implement” the pension reform also applies. He said he would present the proposals in the coming weeks. According to the minister, the reform should be fair and sustainable.

Initially, the cabinet promised employers a possible reduction in social contributions by two percentage points. According to the prime minister, the Czech Republic cannot afford it in the current economic situation. It was also omitted from the program statement that studies should return to the so-called replacement periods, i.e. be included in the time for entitlement to a pension.

The government is still counting on the introduction of tax holidays with an income ceiling for families with parental or three or more children. Labor offices paid out over 276,200 parental allowances in January. According to the data of the statistical office, there are around 134,700 households with three or more children in the Czech Republic. The plan to introduce tax deductions for payments for care services or tax support for multi-source financing of long-term care is not cancelled. In addition to the promise to expand childcare services, the cabinet added neighborhood children's groups.