Czech MPs approved abolition super gross wages and reduction of income tax

Czech MPs approved abolition super gross wages and reduction of income tax

The Czech Chamber of Deputies approved a large package of changes in the area of wages and taxes, which abolishes the so-called super-gross wage. Prime Minister Andrej Babiš's proposal will relieve employees, but it will widen the gap in the budget. Taxation of the so-called super-gross wage in the Czech Republic will probably end after 12 years. When approving the tax package, the Chamber of Deputies adopted Babiš's proposal, which abolishes this taxation. Instead, from next year, only the gross wage should be taxed at a rate of 15%, and for people with a wage of approximately CZK 140,000 (EUR 5311) per month, the part of the income exceeding this limit is taxed at a rate of 23%. The cancellation is not yet final. The law must be assessed by the Senate and signed by the president. The House also approved another part of Babiš's proposal, which relaxes the rules of budgetary responsibility. According to the Ministry of Finance, without this change, the abolition of the super-gross wage would not be feasible. Babiš states the impact on the state budget in the amount of about CZK 52 billion. However, the draft state budget for next year does not take this into account. The effects on public budgets provoked criticism not only from the opposition, but also from the coalition CSSD. At the same time, the Chamber of Deputies also approved the introduction of a meal voucher in the tax package. It also approved a reduction in the rate of excise duty on diesel by CZK 1 per liter. On the contrary, it did not accept any proposal to increase gambling tax rates. It approved an increase in excise duty on tobacco products, but preferred faster tax growth than proposed by the government. The state budget could thus gain an additional CZK 2.1 billion next year. Economists in particular are critical of the abolition of the super-gross wage. According to them, changes with such a significant impact on the budget should not be approved in a period of significant economic downturn. If the law is approved by the Senate and signed by Czech President Miloš Zeman, citizens will have lower taxes starting with the payment for January.