Czech Government Rejects Proposal to Reduce Compensation to Churches Amidst Inflation Concerns

The Czech government has firmly rejected a proposal put forth by opposition lawmakers to reduce compensation payments to churches and religious societies in the country. Members of the ANO party suggested an amendment to the restitution law, aiming to fix the interest rate on restitution payments to avoid the state incurring billions of extra expenses due to surging inflation. However, the proposal faced strong opposition and was turned down by the government on Wednesday.

The contentious proposal sought to set the interest on outstanding compensation payments to churches at either 2.26 or 3.23 percent annually. The goal was to prevent the compensation from increasing in the coming years at the rate of last year’s or the current year’s inflation, which has exceeded a staggering 10 percent.

Advocates of the proposal, including Jiří Mašek, a member of ANO and the vice-chairman of the security committee, argued that fixing interest rates would be fair, particularly to pensioners. They pointed out that while the government has reduced pension valorization to cut costs, it is unwilling to reduce compensation to churches, which will also significantly increase due to inflation. The proposal aimed to address what they considered an inequitable situation.

However, the government’s rejection of the proposal was grounded in the complexity of the issue. Minister for Legislation Michal Šalomoun, representing the Pirates party, emphasized that any changes to the law would necessitate altering contractual agreements with 16 churches and religious societies, as they were guaranteed a negotiated compensation amount.

Martin Baxa, the Minister of Culture from the ODS party, expressed fundamental opposition to the proposal, believing it would harm relations with the churches. He asserted that the opposition’s motivation was more about gaining political points than seeking genuine savings.

The root of the issue lies in the 2012 restitution law passed by the Nečas government, committing the state to make 30 installments amounting to 59 billion crowns in compensation, with interest tied to inflation. However, the unexpected surge in inflation created trouble, leading to a significant increase in outstanding compensation payments. Last year alone, the inflation clause inflated the compensation by an additional 1.5 billion crowns, bringing the total to 48 billion crowns.

With inflation continuing to rise, the amount owed to churches by the Czech state in 2024 is projected to reach an astounding 6.9 billion crowns. The initial estimates did not anticipate such high inflation rates, assuming an average of two percent. The possibility of even higher inflation in the coming years could cause the restitution bill to escalate by tens of billions, posing a significant financial threat.

Church representatives, such as Stanislav Přibyl, Secretary-General of the Czech Bishops’ Conference, have opposed any reduction in compensation, viewing the inflation clause as a means to preserve the value of money rather than seeking profit.

As the Czech government grapples with the impact of inflation on compensation payments, the issue remains a subject of concern and debate among political circles, churches, and the public at large. Finding a viable solution that considers both financial stability and equitable treatment will be essential moving forward.

Article by Prague Forum

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