PRAGUE (AP) — The Czech parliament’s lower house on Friday approved dozens of measures proposed by the government designed to keep the ballooning budget deficit under control.
Czech citizens are a step closer to paying more for beer and medicine while businesses will face higher corporate taxes.
In the 200-seat house, 108 lawmakers from the ruling coalition voted in favor of the plan, while 86 opposition members were against.
When the government introduced the package in May, Prime Minister Petr Fiala said the proposed cuts, tax increases and austerity measures are necessary because the pace of the debt rise is “threatening.”
Fiala said Friday the measures should reduce the budget deficit by 97 billion Czech crowns ($4.2 billion) next year and by 150 billion ($6.5 billion) in 2025.
As a result, the deficit of 3.5% of the gross domestic product expected for this year should drop to 1.8% next year and to 1.2% in 2025.
The package still needs approval from the upper house, the Senate, where the coalition government has a majority, and presidential approval before becoming effective next year.
Corporation tax will go up by two points to 21% while property tax for individuals will be also increased, as well the tax on alcohol, tobacco and betting.
Value-added tax will have two rates, 12% and 21%, instead of the current three — 10%, 15% and 21%).
Medicines will move from the 10% rate to 12%, while people will pay 21% VAT on their beloved beer in bars.
The package is a compromise reached by Fiala's five-party ruling coalition that took over after defeating populist Prime Minister Andrej Babis and his centrist ANO movement in the 2021 parliamentary election.