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A return to perversion

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A crisis means a chance to push through regulations that would otherwise not pass. It concerns populist proposals and election hits, as well as reasonable reforms. The former will please the supporters of one party for a short time, while the latter will help the entire country in the long run. Most countries are implementing a mix of both.

But Topolánek’s government is an exception. It is destroying the reforms that it pushed through with great difficulty just two years ago and that the ODS as well as the Christian Democrats promised in their election programmes.

Petr Nečas and Miroslav Kalousek have agreed to lift the ceilings on health and social insurance for employees. Just less than two years ago, the Czech Republic stopped applying these payments to incomes higher than four times the average wage. At that time we were the last exotic country in the European Union that did not have these ceilings. It’s not any achievement for a few percent of the best paid people. The ceilings just ended the year-long perversion when the duty to pay money to the state is unlimited, while everything the state gives you is limited. Pensions, sickness benefits, maternity allowances. Even with ceilings, Czech pensions are the least fair in Europe.

Ceilings will still be applied to insurance paid by a company to its employees, but not to the sum paid by the employees themselves. The state would make more than CZK 3 billion on the return of this perversion. Not any significant sum for a state budget that totals a trillion crowns.

The ministers will exchange it for destroying two important pillars of their reform that was so hard to enforce. Why did the government come up with the supergross wage? For people to have a clear idea of how much they pay to the state. There is no point in splitting the social insurance between employers and employees, it just hides how much is actually paid.

Kalousek and Nečas’s proposal suggests no other logic than an illusion of a millionaire’s tax: Look, the rich ones will pay. Lifting the ceilings is a populism that will be appreciated neither by ODS and KDU-ČSL voters nor by opposition supporters. The two ministers are going against the long-term interests of the Czech Republic and of their own parties.

Jiří Paroubek is already smiling and promises he would be constructive this time and support the government’s idea. No surprise. Even his election advisors from the US company PSB couldn’t come up with a better campaign for him.


Translated with permission by the Prague Daily Monitor.

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