The Czech government has put forth a comprehensive package of 58 measures aimed at consolidating the state budget and reducing the deficit by CZK 94 billion ($4.3 billion) starting from 2024. These measures are expected to have a cumulative impact of CZK 147.5 billion ($6.7 billion) on the budget over the next two years. The government plans to approve the legislative text for the package in June, with the aim of implementing deficit-reducing measures by January 1, 2024.

The proposed measures encompass both spending cuts and revenue-generating initiatives. The largest spending cut would be in the national subsidy titles for entrepreneurs, resulting in a reduction of CZK 54.4 billion ($2.5 billion). Additionally, spending on the operation of state institutions would be decreased, yielding savings of CZK 11.2 billion ($511.3 million), and salaries in the public sector would be reduced, saving CZK 9.7 billion ($444 million).

To increase revenue, the government plans to raise consumption taxes on tobacco products and liquor, generating an additional CZK 7 billion ($321.4 million). It also intends to eliminate 22 tax exemptions, resulting in CZK 7.6 billion ($349 million) of revenue. Health insurance contributions for employees will be reintroduced at a rate of 0.6%, generating CZK 13 billion ($596 million). The tax rate on the income of legal entities will be increased to 21%, leading to revenue of CZK 22 billion ($1 billion). Moreover, the contribution of self-employed individuals will be raised by CZK 7.5 billion ($344 million), and the property tax will be increased, generating CZK 9.3 billion ($426 million) in revenue.

The proposed package also includes measures such as reducing state support for housing savings accounts, with the annual limit for new and existing contracts set at CZK 1,000 ($45.8). Additionally, the plan entails the closure of 77 regional offices of the financial administration and an increase in the price of motorway vignettes from CZK 1,500 ($68.8) to CZK 2,300 ($105.4) per year.

While the measures are still subject to the legislative process, their implementation would have significant implications for public spending and revenue. Businesses and individuals across the country would feel the impact of these changes, and the outcomes of the legislative process will determine which measures are eventually enacted.