Czech budget deficit reaches highest level since establishment of the republic

The deficit is caused primarily by the coronavirus pandemic

editor: REMIX NEWS
author: Echo24, Czech News Agency

At the end of November, the state budget deficit rose to 341.5 billion korunas (€12.9 billion) from 274 billion korunas (€10.4 billion) in October. This year’s November result is thus the worst since the establishment of the Czech Republic in 1993.
The Czech Ministry of Finance indicated that until the end of November, 180.5 billion korunas (€6.8 billion) had flowed from the state budget to combat the coronavirus pandemic. Direct measures, for example in the form of compensatory bonuses, anti-virus programs, and other programs, required 109.3 billion korunas (€4.1 billion).
The deferral of tax advances was calculated by the Ministry of Finance at 23.2 billion korunas (€881 million) and expenditures on health care in the form of the purchase of protective equipment, rewards for health professionals, and debt relief for selected hospitals at 48 billion korunas (€1.8 billion).
At the end of November, the collection of corporate income tax fell by 17.4 billion korunas year-on-year to 81.5 billion korunas (€3.1 billion). According to the Ministry of Finance, the main reason is the waiver of the June advance on corporate income tax, the possibility of individual determination of different tax advances, and the retroactive application of a tax loss.
The collection of value-added tax fell by 3.1 billion to 262.7 billion korunas (€9.9 billion). In this case, the year-on-year decline in retail sales had a particularly negative effect. Revenues were also dampened by lower tax rates for public transport applied from last February, for heat and cooling from January this year, and for catering services and other services and goods from May and July this year.
Due to the effects of the coronavirus spread, the Chamber of Deputies increased this year’s budget deficit to 500 billion korunas (€18.9 billion) on July 8. The highest deficit so far was in the 2009 budget due to the effects of the global economic crisis, over 192 billion korunas (€7.3 billion).
For next year, the Chamber of Deputies has so far approved in the first reading a budget with a deficit of 320 billion korunas (€12.1 billion). By doing so, MPs have also approved the total revenue and expenditure of the budget and can only propose transfers of money within the budget.
Title image: Finance Minister Alena Schillerová and President Miloš Zeman. (Facebook)


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