William Malcolm

Czech Budget Deficit Hits 326.3 Billion Crowns In September

The state budget deficit at the end of September rose to 326.3 billion crowns from CZK 298.1 billion in August. The Ministry of Finance informed about it today. This is the worst September result since the establishment of the Czech Republic. Last year, at the end of September, the deficit was 252.7 billion crowns.

At the end of September, total budget revenues rose by CZK 20.8 billion year on year to CZK 1.08 trillion. Tax revenues, including social security premiums, increased by CZK 35.7 billion year-on-year to CZK 943.9 billion, while tax revenues excluding insurance premiums alone fell by CZK 11.6 billion year-on-year to CZK 503.8 billion. At the end of September, total budget expenditures rose by 94.4 billion year on year to 1.41 trillion crowns.

“Anti-epidemic measures applied mainly in the first quarter of this year had a negative impact on tax revenues of the state budget.

The ministry also informed that 443.6 billion crowns went from the state budget to fight the coronavirus pandemic from last March to the end of September this year. Direct measures, for example in the form of compensatory bonuses, Antivirus programs and other programs, required CZK 285.3 billion. The deferral of tax advances was calculated by the Office at 36.8 billion crowns and expenditures on health care in the form of the purchase of protective equipment, rewards for health professionals or debt relief for selected hospitals at 121.4 billion crowns. From January to September this year, the Ministry of Finance calculated the total aid from the budget at 225.5 billion crowns.

“Although the pace of widening of the state budget deficit increased again in September, it is still a better result than the Ministry of Finance plan. The revenue side, led by direct taxes, confirms our assumption of better macroeconomic conditions. The key to the resulting deficit will be the resolution of the problematic drawdown of investments, “said František Táborský, an economist at Komerční banka. It still counts on a budget deficit for the whole year of about 400 billion crowns. “However, the results for the last three months suggest that the resulting deficit could be slightly lower,” he added.

At the end of September, the collection of value added tax increased by CZK 4.8 billion year-on-year to CZK 208.7 billion. The collection of corporate income tax increased by CZK 24.2 billion year-on-year to CZK 103.2 billion.

On the other hand, the collection of personal income tax fell by 31.1 billion to 75.9 billion crowns. According to the Ministry of Finance, the year-on-year comparison reflects the impact of tax changes effective since 2021, in particular a reduction in the tax base by more than 25 percent and an increase in the taxpayer’s rebate. The collection was also negatively affected by the compensation bonus paid during 2021.

In the case of expenditure, current expenditure increased. At the end of September, the state spent 1.31 trillion crowns on current expenditures, a year-on-year increase of 100.6 billion. On the other hand, capital expenditures fell by CZK 6.3 billion year-on-year to CZK 99.6 billion. The approved budget envisages capital expenditures of 185.2 billion crowns for the whole year.

At the end of September, the state paid 521.3 billion crowns in social benefits, a year-on-year increase of 15.8 billion crowns. Of this, 399.3 billion crowns went to pensions.

This year’s approved state budget deficit is 500 billion crowns. According to a recent statement by Schiller, however, the budget for the whole year will end with a deficit of about 400 billion crowns. Last year, when the result was affected by the effects of the pandemic, the state budget ended in a deficit of 367.4 billion crowns. For next year, the government approved a deficit of 376.6 billion crowns.