Many working retirees try to avoid higher taxes

Prague, Jan 3 (CTK) - Over 27,500 Czech working pensioners have tried to avoid higher taxation newly imposed on them by the government by briefly giving up their pensioner status.

Within its austerity measures, the right-wing government of Petr Necas (Civic Democrats, ODS) has recently cancelled an income tax exemption thanks to which working pensioners annually saved 24,840 crowns.

The Finance Ministry expected this measure to bring seven billion crowns to the state budget in the next three years. If the pensioners succeed in circumventing the new law, the state's tax revenues will be approximately 700 million crowns lower this year.

Under the new law, the income tax exemption will not be granted to those who are registered as pensioners on January 1, 2013. As a result, many people temporarily officially stopped being pensioners. Some of them cancelled their pensioner status for only a single day, daily Mlada fronta Dnes (MfD) writes yesterday.

In the first three quarters of 2011, the Czech Social Security Administration (CSSZ) registered 157,000 persons who work and receive an old age pension at the same time, which is about 7000 more than in 2010. Old age pensioners represent slightly over 3 percent of income earners in the country.

CSSZ spokeswoman Jana Buranova told CTK that it is the tax office, not the CSSZ that would decide on whether a given person who briefly gave up his or her pensioner status would be granted the monthly income tax exemption of 2070 crowns.

Buranova said the CSSZ does not ask its clients why they want to temporarily cancel their pensioner status.

Radek Lezatka, from the Finance Ministry press section, told MfD that the ministry would carefully check all applicants for an income tax exemption.

Lezatka said the ministry would check why a person cancelled his or her pensioner status. If the status was cancelled for only one day, it is quite clear that the step was motivated by an effort to circumvent the law, which is unacceptable, he indicated.

($1=19.023 crowns)