The draft budget for next year, approved this week by the Czech government, projects a deficit of some 2.3 percent of the country’s GDP. Government officials say the budget will allow for higher public investments and hikes in public sector salaries and pensions. But critics argue the budget is unambitious, and a missed opportunity to narrow the Czech public finance deficit at a time of an economic recovery. More
The lower house of Parliament on Wednesday also passed a draft bill establishing a third level of the value added tax. The 10-percent rate would apply to books, medicine and baby food as of January 2015. The Czech Republic currently has two VAT rates of 21 and 15 percent. The proposal was put forward mainly to benefit pensioners and families with children by lowering the prices of the selected goods.
The lower house of Parliament on Wednesday backed draft legislation introducing a third rate of the value added tax. If approved, the proposal, put forth by the government, would establish a 10-percent rate that would apply to books, medicine and baby food, as of January 2015. The Czech Republic currently has two VAT rates, 21 and 15 percent, respectively. The government believes a third, 10-percent rate would lower the prices of the selected goods, benefiting mainly families with children. Opposition leaders criticized the plan as hypocritical, and instead suggested the existing VAT rates should be lowered. A final vote on the proposal in the lower house is scheduled for later this week.
The price of cigarettes in the Czech Republic is due to rise by up to four crowns for a pack of 20. Wednesday’s approval of the price hike in the lower house followed a fall in the value of the crown that left the Czech Republic in contravention of a new EU guideline on excise duty. More
A cut in Value Added Tax to 10 percent for books, baby food, and drugs was approved by the government on Wednesday at its regular weekly meeting. The reduce rate of sales tax should come into force from the start of 2015. Babies’ nappies did not make it into the basket of tax reduced items because of fears that a reduction here would conflict with European rules. The introduction of a reduced rate of tax is one of the government’s flagship measures. The Cabinet also agreed to abolish charges for visits to doctors and hospitals with the exception of use of emergency services.
Former national police chief Petr Lessy is demanding compensation of CZK 1.2 million and a formal apology from the state for being prosecuted in 2012. He was removed as police president by the then minister of the interior after being charged with slander and abuse of office before a court threw out the prosecution last year. Mr. Lessy told Czech Radio on Saturday that the amount he was demanding corresponded to his legal fees and lost income.
The Finance Ministry has proposed introducing three VAT rates as of 2015, the ctk news agency reports citing ministry sources. This would include the current standard VAT at 21 percent, a reduced 15 percent VAT rate and a lower rate of 10 percent for selected products such as medicines, books and baby food. Contrary to expectations, the Finance Ministry has not included nappies in the lowest rate, on the argument that this is in violation of EU norms and Prague would be unlikely to get an exemption. The proposed draft bill also envisages a series of measures to fight tax evasion.
Almost 17,900 new book titles were published in the Czech Republic in 2013, an increase of around 600 on the previous year, the Czech News Agency reported on Thursday. The figures coincide with the opening of the Czech Republic’s flagship annual book fair, Book World, in Prague on Thursday. New titles peaked in the Czech Republic in 2011 with almost 19,000 being published. Since then the sector has been hit by the imposition of a higher rate of Value Added Tax rate on books and increased costs. The current centre-left coalition government has promised to put books back into a lower VAT band.
More than 300 Czech bookshops were on Wednesday offering 15 percent reductions on their prices as part of a campaign to cut Value Added Tax on books. The Association of Czech Book Sellers and Publishers has welcomed the government’s proposal to cut the current 15 percent VAT rate on books to 10 percent but says that it still believes that the right rate should be 5 percent. The association says a 10 percent rate would still leave the Czech sales tax on books higher than in most other European countries.
The Czech coalition parties have approved plans to cut the VAT rate on drugs, medicine, diapers and food for infants from 15 to 10 percent as of 2015. Prime Minister Bohuslav Sobotka said the Finance Ministry would now incorporate the move into the draft of next year’s state budget; it is estimated that the lower VAT rate would cost the budget several billion crowns. The Czech government is yet to discuss the plan with the European Commission; it will consider plans for further cuts of the VAT rate only after measures to improve VAT collection are implemented, according to the prime minister.