Following the abolition of the super-gross wage, political parties ANO and SPD have formed a coalition to replace it with a 15 % income tax to everyone earning under 137,000 Kč a month, and 23% to those earning more than that.
Opposing parties argue that the income tax won’t be big enough to keep the government within its annual budget, especially since it’s not being offset by any new taxes or revenue sources.
Miroslav Kalousek, former minister of finance and leader of the TOP 09 party, said that “If Andrej Babiš’s amendment is approved, our budget is going to be a complete write-off.”
President Miloš Zeman had his own reservations about the amendment, placing a 2-year limit on it before a new system is proposed.
As it stands, the new income tax model will cause the Czech government to lose at least 85 billion Kč, intensifying discussions of the country’s inability to meet virtually any fiscal responsibilities following the COVID-19 pandemic.
In September, minister of finance Alena Schillerová announced that the Czech Republic wouldn’t be able to fulfil its promise of designating at least 2% of its GDP to NATO, citing COVID-19 related revenue issues.
So far, no coherent strategy to balance the budget or meet financial responsibilities is being discussed.