Social Democrats stated that the new tax cut – the abolition of the super-gross wage – will not benefit any citizen in the Czech Republic. The new proposal, which was agreed on by the Chamber of Deputies, cuts the tax rate from 20% to 15% for low and medium-income groups. For high income groups, the tax will increase to 23%.
Following the abolition, which is supposed to last two years, most of the citizens’ income will rise significantly. Therefore, if one makes 16000 CZK, his net wage would increase by 825 CZK; if 36000 -by 1845 CZK; if 80000 – by 4080 CZK.
According to the calculations, the tax cut will benefit the employees who make under 140,000 CZK while those who make at least four time the average salary will pay 23% instead of 15% tax. However, according to the oppositional parties, the problem is that the government does not have substantial resources to cover for the holes in the budget.
“It is necessary to realize that the tax package, as it is set, will not benefit anyone at all, it will not benefit the Czech Republic and not the citizens of this country,” said Roman Onderka, member of the Chamber of Deputies of the Parliament of the Czech Republic, Novinky.cz reports.
Currently, the estimated cost of the new law varies. According to Stanislav Polčák, the Chairman of the Association of Local Authorities, municipalities will lose up to 10% of their regular income. For Prague, it would mean a loss of 4.3 billion CZK, for Brno – 1.4 billion CZK. The state is expecting to lose about 80 billion CZK overall.
“I had the impression that we were trying to catch up with the Western states. But if the state does not have sufficient resources, we cannot have Western services. What the Prime Minister proposed is a way to weaken the Czech Republic and the state,” said Jan Hamáček, Leader of the Czech Social Democratic Party.
Furthermore, some experts, such as Josef Středula, a Czech trade union activist, points out that these losses in the budget are very hard to cover for. The government would have to solve this problem by increasing other taxes, such as fuel taxes.