Czech president approves plan introducing budget cuts, taxes to keep budget deficit under control 

Czech President Petr Pavel signed into law on Wednesday an economic package comprising numerous measures aimed at implementing budget cuts and heightened taxes to manage the growing budget deficit. The president’s signature marked the final step in the process, as the government proposal, previously approved by parliament, officially became law. This legislation entails increased taxes on alcoholic beverages and medicine in the Czech Republic, a nation renowned for its beer culture. Additionally, businesses will face higher corporate taxes. Prime Minister Petr Fiala had emphasized the necessity of these austerity measures, citing the escalating debt as a “threatening” factor. Pavel said the current situation is unsustainable. According to the government, the measures should reduce the budget deficit by 97 billion Czech crowns ($4.3 billion) next year and 2025 by 150 billion ($6.7 billion). As a result, the deficit of 3.5% of the gross domestic product expected for this year should drop to 1.8% next year and to 1.2% in 2025. Corporation tax will go up by two points to 21% while property tax for individuals will be also hiked, as well as the tax on alcohol, tobacco and betting. Value-added tax will have two rates, 12% and 21%, instead of the current three — 10%, 15% and 21%. Medicines will move from the 10% rate to 12%, while people will pay 21% VAT on their beloved beer in bars. The package is a compromise reached by Fiala’s five-party ruling coalition that took over after defeating populist Prime Minister Andrej Babis and his centrist ANO movement in the 2021 parliamentary election. The opposition condemned the changes and said it planned to take the matter to the Constitutional Court, the highest judicial power in the country, while the labour unions called for a day of protests and strikes on Monday. With inputs from AP.