The indebtedness of the Czech Republic will lead to an increase in taxes

The current indebtedness of the Czech Republic will most likely lead to an increase in taxes in the coming years, believes the head of the Czech National Budget Council Eva Zamrazilová. According to her, the state will not solve the problem by the planned reduction in the number of officials, but it must solve the increase in budget revenues. Failure to do so will jeopardize the quality of healthcare, pensions, civil servants' salaries and the construction of roads and motorways. According to the novinky.cz server, which referred to the daily Právo, the National Budget Council has been warning in this way since March, when it called on the government to consolidate public finances. According to calculations, the Czech Republic may face the so-called debt brake as early as 2024. This means that the Czechia could reach a debt of 55 percent of gross domestic product (GDP). In such a case, the government must approve and submit to the Chamber of Deputies a proposal and a medium-term outlook of the state budget and budgets of state funds, which will lead to a sustainable state of public finances, ie back below 55 percent of GDP. In such a case, the government cabinet will also have to submit proposals to the House for balanced budgets of health insurance companies. "Forced significant savings in the budgets of health insurance companies could lead to a deterioration in the quality and availability of health care or to an increase in health insurance contributions," Zamrazilová told Právo a Novinky. "Investments would also be limited, which would have an adverse effect on, for example, the pace of construction and repair of transport and other infrastructure." she added. The measures will also affect regions and municipalities. This could force municipalities to increase the coefficients for real estate taxation or to increase various fees. In addition, the salaries of teachers and police officers could be reduced. As stated by Zamrazilová, from the point of view of the state budget, the most significant in terms of volume are VAT, excise taxes and income taxes of natural or legal persons. "Given the scale of the problem, it is thus likely that the adjustments would concern one or more of these most significant taxes." On the expenditure side, the largest items include social benefits, in particular pensions, followed by salaries of civil servants or capital expenditures. Zamrazilová warns that after reaching the debt brake, the scope or quality of services provided by the state could be limited. For example, the salaries of officials, firefighters, teachers, police officers, soldiers and other civil servants could be frozen or reduced, or reduced. According to estimates by the Ministry of Finance, total public debt should increase this year from last year's 38.1 percent of GDP to 44.8 percent of GDP. Next year, the ministry estimates public debt at 48.2 percent of GDP and in 2024 at about 52.8 percent of GDP.