Prime Minister Petr Nečas has estimated that between five and eight percent of state workers will leave their jobs due to proposed budget cuts next year. Cuts of 10 percent have been demanded in ministry budgets. The Prime Minister said there was a choice between across the board pay cuts of 10 percent or a 10 percent cut in employee numbers. He reckoned that most ministries would opt for a mix of the above but that there would be a bigger emphasis on job cuts. The 2011 budget will start to be debated in the lower house of parliament in October. The government programme calls for cuts across the public sector with the exception of teachers.
Czech Finance Minister Miroslav Kalousek said on Sunday that he had submitted a demand for European Union authorities to give him fast track approval for a change in the rules for VAT charged on motor fuels. Mr. Kalousek said the state was currently losing around 8.0 billion crowns a year through fraud on VAT payments on such fuel. He wants petrol stations to be forced to include the tax on fuel sold. At the moment sales are subject to a chain of fraud.
Prime Minister Petr Nečas has said he would be willing to accept a new flood tax proposed by the finance minister but only for one year. He made the statement in an interview for the financial daily Hospodářské noviny on Friday, stressing that he was not willing to raise taxes for a longer period. Finance Minister Miroslav Kalousek raised the issue following recent flash floods which devastated parts of northern Bohemia. Under his plan, members of the workforce would contribute to a flood relief fund in the form of a 100 crown-a-month cut in their income tax break. The proposal has been a point of contention between the finance minister and the prime minister in the media since.
With saving the order of the day, individual ministries are busy reviewing expendables in every sphere of activity. In addition to freezing projects and cutting jobs, some of them are considering selling off property that they can spare. In the wake of getting government approval for closing down five Czech embassies, the foreign ministry said it was considering selling the stately Štiřín chateau which it occasionally uses for international gatherings.
The Finance Ministry has prepared a fresh amendment to the country’s lottery law aimed at allowing local councils to clamp down on automatic gaming machines and bars. The changes would allow councils to regulate the most modern video gaming machines as well as the traditional one armed bandit machines for which they already have powers. The ministry proposal calls for a maximum five year phase out period for lotteries and other games of chance so that investments can be recouped. A previous attempt to clamp down on the gaming industry failed when President Václav Klaus vetoed it in June. He argued many charities and associations would suffer from not receiving their share of gaming and lottery receipts.
Czech trade unions have slammed changes to the labour code proposed by the government which would extend the length of short-term contracts, slash severance pay, and cut unemployment benefits for people who quit their jobs. The country’s main group of trade unions said Tuesday that if the changes went through, Czech employees would have the worst working conditions in Europe. Not all, however, are certain the government will push through all the tough changes it is promising – not without fully negotiating with the unions first.
As government ministries prepare for a year of austerity, the Interior Ministry has announced its plans for cutting its budget by 8.3 billion crowns. The result is what Minister Radek John warned would be a painful year for police and fire departments, which - in addition to facing pay cuts from the Labour Ministry - will also be stripped down to the bone financially. Many are concerned what the cuts will mean for safety and security.
Finance Minister Miroslav Kalousek has spoken out against the prime minister’s disapproval of a plan to finance flood relief from income tax breaks. Mr Kalousek said that the chairmen of the coalition parties had agreed on his ministry’s flood tax two weeks earlier, and said the PM’s about-face on the issue was absolutely inappropriate in a coalition. Following floods in north Bohemia two weeks ago, Mr Kalousek said all working Czechs would contribute to a flood relief fund in the form of a CZK 100-a-month cut in income tax breaks, a move some critics slammed as nothing less than a new tax. On Sunday, Prime Minister Nečas said he had a number of reservations regarding the flood tax, and referenced a pre-election promise not to increase direct taxes.
The prime minister, Petr Nečas, says that government cost-cutting
measures could cause growth in the Czech economy to slow by 0.6 or 0.7
percent next year. Speaking on a TV debate programme he said, however, that
the cuts were necessary – otherwise debts would pull the country’s
economy down in the medium term. Mr Nečas’s coalition government has
pledged to balance the budget by 2016. To achieve this, it plans to reduce
state sector salaries and expenditures by 10 percent, cut social welfare
and limit support for building savings.
The Czech National Bank predicts GDP growth of 1.8 percent in 2011, while the Finance Ministry is more optimistic, foreseeing growth of 2.3 percent.
Prime Minister Nečas has raised doubts over the introduction of a solidarity fund to deal with the effects of flooding in the future. Following floods in north Bohemia two weeks ago, the minister of finance, Miroslav Kalousek, said all working Czechs would contribute to the fund in the form of a CZK 100-a-month cut in income tax breaks, a move some critics slammed as nothing less than a new tax. On Czech Television on Sunday the prime minister said he was now considering whether to go ahead with the plan, adding that the money to deal with flooding ought to be found from other sources.
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