Earlier this week, it was announced that the Czech government is planning to discuss the idea of the most significant tax reform over the last 13 years during the cabinet meeting on the 11th August. The reform is supposed to abolish the income tax of 15% of the super-gross wage (which also includes health and social insurance contributions paid by the employer) by cutting it down to the payment of 15% of gross wage. Currently, it makes for about 20% of gross wage. However, the Deputy Prime Minister and head of the CSSD, Jan Hamáček, called the plan unrealistic, Idnes.cz reports.
Prime Minister Andrej Babiš announced the abolishment of the super-gross wage by saying the following in his regular vlog on Facebook:
“Of course, we will abolish the super-gross wage. You will definitely see it all on payrolls, because it is necessary to reduce the tax burden on employees.”
According to Babiš, such relief will stimulate the economy by encouraging people to spend more money after earning more. However, Jan Hamáček does not see this scenario as very likely.
“In my opinion, fifteen percent is unrealistic due to a huge loss of state budget revenue,” Hamáček told the daily Právo, Idnes.cz reports.
The Minister of Finance, Alena Schillerová, agrees with Babiš, but points out that the budgetary implications will mean a loss of 90 billion crowns.
“In general, we are in favor of reducing the tax burden on employees. I do not have a problem with 15 percent, but it must go hand in hand with a solution to the state budget failure that will be caused by this, ” commented Jan Chvojka, the head of CSSD deputies, Idnes.cz reports.