Illustration photo – Minister of Finance Zbyněk Stanjura.
Prague – The real estate tax could be increased up to twice as much, and the revenue from the change in the amount of six to eight billion crowns would be collected by the state for itself. Finance Minister Zbyněk Stanjura (ODS) said this in an interview for today's Hospodářské noviny (HN), this is one of the measures to improve the state budget. According to the minister, about 65 such measures are prepared and their sum exceeds 70 billion crowns, which the state wants to save in the budget. However, Stanjura does not count on the approval of all proposals. Changes to the value added tax (VAT) are being debated, the two rates of 13 and 14 percent would be roughly budget-neutral, Stanjura also said. According to him, at least a higher unit of billions of crowns would bring an increase in consumption taxes, in principle the agreement is to reduce or cancel the support for building savings.
Stanjura has repeatedly stated that the government is preparing a consolidation package that should reduce the structural deficit by at least one percent of the gross domestic product, i.e. roughly 70 billion crowns. It should concern the state budget for next year. 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.
Until everything is agreed, nothing is agreed, Stanjura emphasized. However, according to him, there are already some partial agreements. “About 65 measures were put together, and the Ministry of Finance expertly recalculated how much each could bring on the income or expenditure side. The sum of those measures is much greater than 70 billion, but not all of them will pass. We were based on all the proposals of the National Economic Council of the Government (NERV) , there were also proposals from individual ministries. Now we will act in a narrower group and at the turn of March and April it will be given to the leadership of the political parties,” he added.
Property tax in the Czech Republic is one of the lowest in Europe and is now the exclusive income of municipalities. Last year, 12.42 billion crowns were collected from this tax, while according to Stanjura, the state bears the costs of administering the tax of 1.2 billion crowns. The tax calculation includes a coefficient determined by the size of the municipality. “So the maximum is that the state would increase the basic coefficient of this tax to no more than double, and collect this tax increase for itself. It can bring six to eight billion kroner to the budget,” said the HN minister. As a complication of the tax system, he rejected the introduction of a progression in real estate tax, where the lowest tax would be paid for the first property in which the owner lives, and for each subsequent one a higher tax would be paid.
VAT is now paid at the basic rate of 21 percent and at two reduced rates of ten and 15 percent. Stanjura said that as finance minister he would rather have two VAT rates than three, it would simplify the tax system. “The two rates of 13 and 14 percent would be approximately budget-neutral. The benefit to the state budget will be determined by which goods and services will remain at a reduced rate. I would leave those there that meet social, health or other significance that the state considers correct ,” said HN.
According to Stanjura, there is agreement in principle on the change in building savings. “We are only looking for some final parameters. Either the support will be reduced or it will be cut off completely,” he told the newspaper. He does not want to cancel the tax deduction of interest from building savings loans, but if someone proposes it, he will not be against it, the minister noted.
According to Stanjura, when changing the social insurance paid by self-employed persons (OSVČ), the Ministry of Finance directs its calculations to what is the tax base from which the insurance is calculated. “If the minimum insurance shouldn't be higher. Today it's half the difference between income and expenses. We're having another debate about what to do with lump sums, especially for professions where we know the costs can't be that high – that's the group with a 40 percent spending flat rate,” said the minister. Lawyers, doctors or architects, for example, can use the 40% flat-rate expenditure.
The saving 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 income side, he said Stanjura at the end of February on Czech Television. He stated that he is planning, for example, to change the taxation of gambling so that the state budget will receive roughly one billion in addition to the current collection of around nine billion crowns per year. On the contrary, according to Stanjura, the government will probably abandon the proposal to tax so-called still (non-sparkling) wine.