System of sickness benefits
- Lowering the level of sickness benefits for the first three calendar days of sick leave from 50 % to
25 % of the daily assessment basis; - Reduction of the assessment basis from 100 % to 90 % for the first 14 days of sick leave;
- Freezing of the current reduction caps for defining the assessment basis;
- Extension of the decisive period for the assessment basis from 3 to 12 months.
System of state social support
- Abolition of transportation benefit that proved ineffective;
- Removal of the upper limit on the earnings of parental allowance recipients;
- When assessing the eligibility of self-employed persons for benefits, it will be presumed that they
earn a minimum notional income of 50 % of the average wage; - The level of the subsistence minimum decisive for eligibility for benefits and the level of benefits
will be increased only by the minimum required by law (i.e. on the basis of CPI growth for the
entire household).
Wages and employment in the government sector
- A decrease in the number of employees at the level of central government with the goal of
reducing their number by 6 % (approximately 29 thousands posts) in the period 2004 to 2006; - Introduction of the 16-class salary tariff in a form that will significantly limit the fiscal impact of
this step; - Freezing of salaries of MPs and government officials, judges, state attorneys and similar officials
at their 2003 level throughout the period 2004-2006.
Other measures and discretionary changes
- Reduction in the state subsidy for housing savings schemes;
- Lower military spending;
- Lower subsidies to businesses;
- Reduction of the operation costs of individual ministries.
Annex 2: Tax changes
The common denominator of the changes contained in the two tax packages put forth at the first and the
second stage of public finance reform, is the reinforcement of indirect taxes, compensated for by a fall in
income taxes. The first stage was designed with regard to the obligation of the CR to harmonise its tax
legislation with the appropriate EU directives and at the same time it contributed to a reduction in the
public finance deficit. On the other hand, the second tax package is perceived as an instrument of
structural reforms and strives to promote potential growth in the Czech economy.
Value added tax
- In accordance with EU regulations selected goods and services were transferred from the reduced
(5 %) to the standard rate. The change took place in two steps - a part from 1 January 2004 (e.g.
telecommunications) and the remaining items from 1 May 2004 (e.g. construction works);