President Miloš Zeman has praised the government for its plans to index link pensions and increase monthly tax breaks for parents who have more than one child. Speaking on a Czech TV politics show on Sunday, the head of state also said he was glad that preparations for a civil service law were making progress. Mr. Zeman said he could only find fault with the Social Democratic Party-headed coalition for stalling on the introduction of a social housing bill. The president said he planned to attend a meeting of the government on June 16.
It is one of the flagship measures of finance minister Andrej Babiš aimed at stamping out the country’s rampant tax evasion and filling the state coffers. And even before it is officially supposed to be up and running the special tax evasion unit, popularly dubbed Kobra, is already at work and looking forward to changes in the law that will make its task easier.
The coalition parties have agreed to increase tax credits for parents with more than one child. Next year parents will be able to deduct more from their tax returns for second and third children. While the Christian Democrats, who strongly back the change, want the credits to rise even further in future years, the minister of finance, Andrej Babiš of ANO, said it was only possible to discuss changes in the short term as it was impossible to predict how the economy would develop. At present parents get a monthly tax credit of over CZK 1,100 for every child; in 2014 there will be CZK 200 more for a second child and CZK 300 more for a third.
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.
Czech president Miloš Zeman has said on a visit to Romania that Czech firms could play a major role in building the country’s transport and energy infrastructure and new power production capacity. Turning to foreign relations, Zeman said that Romania feared for the future of the former Soviet state, Moldova. Fears were based not just on the possibility of invasion but also the fact that the country had not built up sufficient independent energy capacity and links to the European Union. The Czech head of state is due to visit Moldova on Thursday and Friday.
Finance minister Andrej Babiš has backtracked on proposed moves to clamp down on the tax breaks offered to the self-employed. Public broadcaster Czech Television said the minister was no longer insisting on changes ahead of a meeting of leaders of coalition parties on Wednesday. The smallest party in the government, the Christian Democrats said they were totally opposed to Babiš’ proposed changes but they received support from the left-of-centre Social Democrats. The main change advanced was the abolition of tax breaks for those who opted to automatically write off tax on 60 percent of their earnings.
The Czech Finance Ministry on Monday launched its spring issue of government bonds worth about 5 billion Czech crowns. It is offering investors three different maturities. Interest in the bonds is said to be considerable. The ministry, which has spring and autumn bond sales, plans to issue 20 to 50 billion crowns worth of retail bonds in 2014. The gross borrowing need for this year is expected to be 400 billion crowns. To date, the state has issued retail bonds worth 87.6 billion crowns or 5 percent of the overall state debt.
Mortgage payments on average slice off a third of people’s incomes in the Czech Republic, with Prague inhabitants paying up to three times as much as people in other parts of the country, according to data collected by Golem Finance and released by the Czech Statistics Office. Mortgages in Prague amount to three fifths of the borrower’s income, followed by mortgages in south Bohemia which slice off 32 percent on average. The cheapest mortgages are in the Ustí region north of Prague, which only amount to 12 percent of a borrower’s income on average.
The Czech Republic will try to access EU funds to subsidize eco-friendly pellet stoves that will reduce pollution in areas where coal burning is the main form of heating, according to Environment Minister Richard Brabec. Minister Brabec said the ministry would strive to get the equivalent of nine billion crowns for this purpose between 2014 and 2020 which could finance around 150,000 eco-stoves. The money would be used predominantly in the most polluted eastern parts of the country where air-pollution is a massive problem. So far these subsidies have been funded from government funds to the tune of 220 million crowns.