The government is set to publish its consolidation package and pension reform on Thursday. He wants to start presenting the set of measures symbolically at 11:55, i.e. five minutes to twelve. Representatives of the coalition parties discussed individual plans to reduce the state’s indebtedness and restore public finances for weeks, and they ended the negotiations on Wednesday.
The presentation of the consolidation package, the reactions of politicians and economists will be followed by Aktuálně.cz in an online report from 11 a.m.
President Petr Pavel told Czech Radio on Wednesday that the consolidation package should contain 55 measures. Government politicians did not want to approach them yet. They did not want to comment on planned pension changes either.
The Czech Republic operates with deficit budgets and is quickly in debt. In recent years, expenses have exceeded income by several hundred billion crowns every year. Finance Minister Zbyněk Stanjura (ODS) repeated several times that the goal of the coalition is to reduce the structural deficit by at least 70 billion crowns. This corresponds to about one percent of gross domestic product (GDP).
However, there will be a need to obtain a higher amount from savings or from new incomes in order to cover new expenses, for example for teachers’ salaries or for defense. The structural deficit represents a mismatch in the setting of income and expenditure. Last year, it reached 2.6 percent of GDP. According to economists, this situation is unsustainable in the long term.
Stanjura has previously stated that he would like to reduce state subsidies by tens of billions. He proposed the merger of two reduced VAT rates and the transfer of some items between the rates. It was about canceling tax exemptions. There were disputes, for example, about the taxation of still wine. Some intentions then fell out of the file.
National debt | Photo: Aktuálně.cz
According to experts, even the pension system is not sustainable in its current form. Pension spending is rising sharply, now accounting for about 30 percent of government spending. Last year almost 600 billion crowns were paid out, this year it could be roughly 90 billion more. The pension insurance deficit could amount to around 80 billion crowns. In the coming years, it could rise to several percent of GDP per year.
The proposal envisages, for example, an earlier pension for demanding professions and a later one than before for others. Pensions should grow more slowly. The new pensions could also be lower, a smaller part of earnings would be taken into account when determining them. Taxes for self-employed people could rise, and contractors could also start paying more. For the period of care, the pension could be calculated from the national average wage. Spouses could have a common basis for pension calculation.
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