According to the Ministry of Finance, at the end of March, the general government deficit stood at 105 billion crowns, showing a reduction of 61.2 billion crowns from the previous year. This positive trend is mainly attributable to a 12% increase in government revenue and a 2.6 % reduction in spending compared to 2023.
Revenue
The first quarter noted an increase in state revenues, which exceeded the previous year’s figure by 46.6 billion crowns to a total of 449 billion crowns. This improvement was driven by growth in tax revenues, insurance premiums and European funding.
Personal income tax collection shows an increase of 16.0%, equivalent to CZK 4.0 billion, a direct reflection of the wage increase and tax reforms undertaken (the reduction of the band for the second tax rate and the adjustment of the taxation of certain non-cash benefits). Similarly, the 8.7% increase in value-added tax collection, which translates into an additional 6.9 billion crowns, underscores a propensity for greater household consumption.
Similarly, corporate income tax collection increased by 16.7%, thanks in part to the quarterly tax due date and the settlement of income from some taxpayers who filed returns by April 2. In addition, last year, companies in the energy, petrochemical and banking sectors paid 13 billion crowns as advance payment for their windfall earnings.
In the area of social security, with the reintroduction of employee health insurance by 0.6% and an increase in the minimum tax base for the self-employed, it saw premium contributions rise by 7.9% equivalent to 13.0 billion crowns.
Finally, consumption and energy taxes increased by 11.6%, an increase of 3.8 billion crowns over the previous year, driven mainly by excise taxes on mineral oils and alcohol consumption tax, which increased by 14.2 % and 42.5%, respectively.
Expenses
Expenditures showed a 2.6 % decrease from the previous year, amounting to 554 billion crowns. The deletion of state energy aid played a key role in this reduction, especially in the high-intensity sectors, along with national debt service and contributions to the European Union budget. Despite the overall decrease, some sectors saw increases in their spending, such as the pension system and funding for research, development and innovation, as well as Ministry of Defense purchases and public health insurance payments. More specifically, pension expenditures accounted for the bulk of social benefits, with a 5.5 % increase, while other increases included housing allowance and unemployment benefits.
The increase in monthly public health insurance payments for state insured from CZK 1,900 to CZK 2,085 is expected to strengthen the state healthcare system by another CZK 12.3 billion. Capital expenditures also contracted by 7.1%, or a reduction of CZK 2.6 billion, paving the way for the transition to a new financial perspective.
Finance Minister Zbyněk Stanjura expressed optimism, pointing to the best March result in five years and predicting that new fiscal measures will help further reduce the deficit by about 43 billion crowns. According to him, the annual improvement in the budget deficit and a virtually balanced monthly economy not only confirm the soundness of the adopted fiscal strategies but also open up prospects for a sustainable economic recovery and greater financial stability.
Source : https://www.mfcr.cz/
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